According to the latest quarterly economic report released by the Central Bank of Nigeria (CBN), consumer credit in Nigeria experienced a notable increase of 1.3 percent, reaching a total of N2.35 trillion in the first quarter of 2023, up from N2.32 trillion in the previous quarter. This growth represents a 20.9 percent surge from N1.94 trillion recorded in the final quarter of 2021.
The report attributed this expansion in consumer credit to several factors, including increased liquidity in the banking system and improved access to formal financial services, especially through fintech channels. These developments coincided with the implementation of the naira redesign policy, which further facilitated consumer lending.
Consumer credit, which accounted for 8.1 percent of total claims in the private sector, showed a breakdown of N2.35 trillion. Within this category, personal loans constituted a significant portion, totaling N1.75 trillion, or 74.5 percent, while retail loans made up the remaining 25.5 percent at N598.3 billion.
The report also highlighted that the growth in consumer credit during the final quarter of 2021 was primarily driven by a slight decline in maximum lending rates. During that period, consumer credit outstanding reached N2.07 trillion, marking a 6.7 percent increase from N1.94 trillion at the end of September 2021. This represented 8.5 percent of total credit to the private sector.
The expansion of the banking system’s liquidity was attributed to the combined effects of fiscal and monetary operations in the first quarter of 2023. Fiscal injections and the repayment of matured CBN bills rose to N2.45 trillion and N309.4 billion, respectively, up from N2.31 trillion and N231.12 billion in the previous quarter.
The CBN report acknowledged that the surge in consumer credit reflects the evolving financial landscape in Nigeria, with fintech companies playing a pivotal role in expanding access to credit and formal financial services.
This positive growth in consumer credit is expected to have a significant impact on Nigeria’s economic development and financial inclusion, as more consumers gain access to the funds they need for personal and retail purposes.
As consumer credit continues to rise, it remains an essential indicator of the nation’s financial stability and the effectiveness of policies aimed at enhancing access to credit for Nigerians.