Nigerians’ borrowing rises as living costs strain household incomes
Nigerians’ outstanding personal loans increased by approximately ₦58.5 billion in the second quarter of 2026, reaching ₦1.99 trillion as households grappled with rising living costs and expensive credit.
Figures from Central Bank of Nigeria’s (CBN) Second Quarter 2026 Economic Report showed that personal borrowing grew by 3.03%, from approximately ₦1.93 trillion in March to ₦1.99 trillion at the end of June.
The increase contributed to a broader rise in consumer credit, which climbed by 3.26% to ₦3.17 trillion from ₦3.07 trillion during the preceding quarter, representing approximately ₦100 billion in additional outstanding loans.
According to CBN, personal loans accounted for 62.87% of total consumer credit, while retail loans represented the remaining 37.13%.
This means that nearly ₦63 of every ₦100 owed by consumers to financial institutions was classified as personal borrowing.
Retail loans also increased by 4.10%, rising from approximately ₦1.13 trillion to ₦1.18 trillion during the three-month period.
Although retail lending grew faster in percentage terms, personal loans remained the dominant component of Nigeria’s consumer credit market.
The increase occurred amid renewed inflationary pressures, which continued to undermine household purchasing power.
Headline inflation rose from 15.38% in March to 15.91% in June, partly reflecting higher energy and commodity prices associated with the Middle East conflict.
The resulting increases in transportation, production and distribution costs placed additional pressure on households whose incomes had not kept pace with expenditure.
However, CBN figures do not establish whether the increase in personal loans resulted primarily from financial hardship, higher consumer spending or improved access to credit.
Borrowing also remained expensive, with the banking industry’s average prime lending rate declining marginally from 19.37% to 19.01% during the second quarter.
The maximum lending rate increased slightly from 34.34% to 34.37%, highlighting the high cost of financing for some borrowers.
These are general banking-sector lending rates rather than interest rates charged specifically on personal loans.
Meanwhile, findings from the 2026 Access to Financial Services in Nigeria Survey suggest that an increasing proportion of borrowers are using credit to meet immediate financial needs rather than finance productive investments.
The survey found that 40.8% of Nigerians borrowing from regulated financial institutions used loans for consumption and coping expenses, compared with 31.7% in 2023.
Over the same period, the proportion borrowing for productive enterprises declined from 40.2% to 34.3%, while borrowing to acquire household assets fell from 25.2% to 23.4%.
Access to formal credit nevertheless improved, with the proportion of adults using regulated lending services increasing from 6% in 2023 to 10% in 2026.
Approximately 11.9 million Nigerians borrowed from formal financial institutions, while 36% of adults accessed credit when informal lenders were included.
Borrowing among Nigerians aged 18 to 35 also increased, reflecting wider participation in consumer credit markets.
The findings suggest that while financial inclusion is expanding, the growing use of loans for everyday expenses raises concerns about repayment capacity, especially where borrowing costs remain high.
What to know:
Nigeria’s household credit market has undergone significant changes amid inflation, monetary tightening and the expansion of digital lending services. Outstanding personal loans stood at approximately ₦3.32 trillion in November 2024 before declining to ₦1.99 trillion by November 2025, reflecting a substantial contraction in consumer borrowing. The balance subsequently stood at ₦1.96 trillion in January 2026 before rising to ₦1.99 trillion at the end of June. The latest figure therefore represents a quarterly increase, not an all-time record. Since the economic reforms introduced in 2023, higher transportation, energy and food costs have placed considerable pressure on household budgets. Although greater access to credit can support consumption and business activity, sustained reliance on expensive borrowing to meet basic expenses could increase repayment difficulties and household financial vulnerability.
