There has been a steep rise in the number of Nigerians seeking personal loans, climbing 329% as of March 2024. This surge has resulted in a boom in digital lending companies’ applications, with approvals jumping almost 80% since April 2023. This trend indicates that more Nigerians are seeking credit, aligning with the massive increase in personal loans to N7.52 trillion by March 2024.
The Federal Competition and Consumer Protection Commission (FCCPC) is the government institution that registers and approves digital lenders under its 2022 guidelines before they can operate.
The Central Bank of Nigeria (CBN) says the growing demand for consumer credit is due to the popularity of loan apps and rising inflation, which was 32.15% in August 2024. The CBN also highlighted that easier access to financial services, especially through fintech, helped boost consumer credit, particularly after the naira redesign.
A report by Piggyvest found that four out of ten Nigerians are in debt, with at least a quarter of Nigerians owing loan apps. Similarly, research by SBM Intelligence revealed that 27% of Nigerians, across all income levels, now use loan apps to manage living costs amid soaring inflation. Economic hardships have doubled the demand for loans, pushing many to rely on these apps.
The booming demand for loans has driven growth in the loan app industry. However, efforts to regulate the sector in 2024 have also led to more companies registering. High interest rates and rising poverty have increased loan defaults, causing bad debt for many digital lenders.
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