Seeking to tackle the surging cost of living and escalating borrowing trends, the 2024 budget by the Nigerian Federal Government now incorporates a Consumer Credit Fund amounting to N100 billion.
Highlighting the economic strain, Nigerians sought loans totalling approximately N740 billion from banks between January and September 2023. This surge in borrowing is a direct consequence of persistent inflation and diminishing purchasing power faced by the citizens.
According to the Central Bank of Nigeria’s quarterly economic reports, consumer credit witnessed a noteworthy 32% increase, soaring from N2.31 trillion in Q4 2022 to N3.05 trillion by the end of Q3 2023. Personal loans accounted for 74.8% of this credit, while retail loans comprised the remaining 25.2%.
The rising inflation in Nigeria has further exacerbated the cost of essentials like food, fuel, and rent, pushing approximately four million Nigerians into poverty during the first five months of 2023, as estimated by the World Bank.
In a bid to counter these challenges, the Federal Government’s introduction of the N100 billion consumer credit fund comes as a solution. The initiative is a response to the increasing inflationary pressures and the need to provide financial relief to citizens grappling with rising costs.
The Presidential Council on Industrial Revitalization has established a Technical Working Group. Comprising members from the Central Bank of Nigeria, the National Identity Management Commission, and the Federal Competition and Consumer Commission, this group aims to formulate a robust framework to enhance consumer credit in Nigeria.
Dr Doris Nkiruka Uzoka-Anite, the Minister of Industry, Trade, and Investment, stressed the essence of an efficient consumer credit system in improving market efficiencies and addressing gaps in consumption and productivity. The Technical Working Group, as part of its mandate, seeks to propose and implement a viable institutional and regulatory framework to enhance the consumer credit landscape.
During the inaugural meeting of the Technical Working Group for Consumer Finance, Uzoka-Anite emphasized the importance of an efficient consumer credit system, stating that it is a key element for successful economies, offering consumers immediate access to credit and promoting financial inclusion.
The Minister also highlighted the challenges faced by Nigerians in accessing credit, including stringent eligibility criteria, high-interest rates, identity-related hurdles, fragmented data sources for proof of livelihood and financial worth, lack of awareness or understanding of credit processes, and insufficient credit available for lending.
With the introduction of the consumer credit fund, the Nigerian government aligns its efforts with the broader goal of stimulating economic growth and mitigating financial challenges faced by individuals in the country.
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