Nigerians’ outstanding personal loans increased by an estimated N58.5bn in the second quarter of 2026, reaching N1.99tn at the end of June, as households faced persistent inflationary pressures and high borrowing costs.
An analysis by The PUNCH of the Central Bank of Nigeria’s Second Quarter 2026 Economic Report showed that personal loans rose by 3.03 per cent from approximately N1.93tn recorded at the end of March.
The development came as total consumer credit increased by 3.26 per cent to N3.17tn from N3.07tn in the preceding quarter, representing an increase of about N100bn within three months.
The CBN stated, “Consumer credit outstanding increased by 3.26 per cent to N3.17tn, from N3.07tn in the preceding quarter. The increase reflected growth in both retail and personal loans, which rose by 4.10 per cent and 3.03 per cent, respectively.”
According to the report, personal loans accounted for 62.87 per cent of total consumer credit, while retail loans constituted the remaining 37.13 per cent.
This means that nearly N63 out of every N100 owed by consumers to financial institutions was classified as personal borrowing, highlighting its dominance in the consumer credit market.
Retail loans also increased by approximately N46.5bn to N1.18tn at the end of June, compared with an estimated N1.13tn in March, representing quarterly growth of 4.10 per cent.
Although retail loans recorded a faster percentage increase, personal loans contributed more to the outstanding stock of consumer credit.
The increase in personal borrowing occurred amid renewed inflationary pressures, which continued to affect household purchasing power.
The CBN reported that headline inflation rose to 15.91 per cent in June 2026 from 15.38 per cent in March, reflecting increases in the prices of essential goods and services.
The report attributed the development largely to higher energy and commodity prices associated with geopolitical tensions in the Middle East, which increased production and transportation costs.
These conditions placed additional pressure on household expenditure, particularly for consumers whose incomes had not increased sufficiently to offset rising prices.
However, the report did not establish whether the increase in personal loans was driven primarily by household financial difficulties, consumption needs or improved access to credit.
The growth in consumer borrowing also occurred despite elevated lending rates in the banking sector.
According to the CBN, the average prime lending rate declined marginally to 19.01 per cent in Q2 from 19.37 per cent in the preceding quarter.
In contrast, the maximum lending rate increased slightly to 34.37 per cent from 34.34 per cent, indicating that borrowing remained expensive for some categories of bank customers.
Although these rates reflect broader banking sector lending conditions rather than specific personal loan charges, they provide an indication of the financing environment confronting borrowers.
A recent report ‘Enhancing Financial Inclusion & Advancement’ noted that four in every 10 Nigerians borrowing from formal financial institutions now take loans mainly for consumption and coping needs, as rising financial pressures increasingly push credit away from productive activities.
The ‘2026 Access to Financial Services in Nigeria Survey’ revealed that 40.8 per cent of formal borrowers used loans for coping and consumption, up sharply from 31.7 per cent in 2023.
The 9.1 percentage-point increase made coping and consumption the largest purpose of formal credit, overtaking productive enterprise borrowing, which fell from 40.2 per cent to 34.3 per cent during the same period.
Borrowing for household assets also declined from 25.2 per cent to 23.4 per cent. The report warned, “Coping/consumption purposes rose from 31.7 per cent to 40.8 per cent; productive purpose fell from 40.2 per cent to 34.3 per cent. We need to ensure that credit builds productive capacity and does not produce distress.”
Formal credit use increased from six per cent of adults in 2023 to 10 per cent in 2026, with about 11.9 million Nigerians borrowing from regulated providers. When informal sources were included, 36 per cent of adults had access to some form of credit.
Credit use among informally employed Nigerians tripled from five per cent to 15 per cent, while borrowing among people aged 18 to 35 rose from four per cent to 10 per cent. Business owners recorded an increase from four per cent to 10 per cent, while farmers rose from two per cent to six per cent.
(Punch)
