Personal loans obtained by Nigerians have risen to an estimated N2.06 trillion in May 2026, accounting for nearly two-thirds of total consumer credit. This increase is attributed to households turning to borrowing amid persistent cost pressures and weak consumer spending. The Central Bank of Nigeria's Economic Report revealed that total consumer credit outstanding increased by 1.60 percent from N3.13tn in April to N3.18 trillion in May.
The Central Bank of Nigeria's report showed that personal loans accounted for 64.78 percent of the total consumer credit, while retail loans made up the remaining 35.22 percent. Personal lending recorded stronger growth during the month, rising by 1.98 percent, or roughly N40 billion, compared with a 0.90 percent increase in retail loans. This development points to a growing reliance on unsecured or personal borrowing to meet household financial needs.
The increase in consumer borrowing occurred against a backdrop of weak economic activity. The CBN's composite Purchasing Managers' Index stood at 49.60 points in May, although this was marginally higher than 49.40 points in April, remaining below the 50-point threshold that separates expansion from contraction. The apex bank attributed the contraction to subdued demand, declining new orders, and elevated production costs.
Inflation also remained elevated during the period, with headline inflation rising to 15.93 percent in May from 15.69 percent in April. Although month-on-month inflation slowed from 2.13 percent to 1.75 percent, households continued to face high living costs. The rising dependence on consumer credit is reflected in the latest Access to Financial Services in Nigeria Survey.
The survey found that 40.8 percent of formal borrowers used loans for coping and consumption in 2026, up from 31.7 percent in 2023. Conversely, borrowing for productive activities declined from 40.2 percent to 34.3 percent over the same period, raising concerns about the quality and economic impact of credit expansion. Formal credit usage expanded, rising from six percent of adults in 2023 to 10 percent in 2026.
Credit uptake among informally employed Nigerians tripled from five percent to 15 percent, while borrowing among Nigerians aged 18 to 35 increased from four percent to 10 percent. Borrowing among business owners rose from four percent to 10 percent, while farmers increased from two percent to six percent. However, the expansion of credit has come with significant repayment risks.
The survey showed that 45.8 percent of formal-credit users experienced some or serious repayment stress, while a much larger 83.8 percent reported ongoing financial stress. For banks and other lenders, the trend presents a mixed picture, with rising consumer lending providing an important avenue for credit growth and financial inclusion, but also raising credit-risk concerns if household incomes fail to keep pace with debt obligations.
Key points
- Personal loans now account for almost two-thirds of outstanding consumer credit.
- Sustained growth in household borrowing could become an increasingly important factor for banks' loan books and asset quality.
- The increasing use of loans for consumption rather than productive investment could raise credit-risk concerns if household incomes fail to keep pace with debt obligations.
