Personal Loans Hit ₦2.06tn as Nigerians Turn to Credit Amid Rising Cost Pressures

Personal loans obtained by Nigerians rose to an estimated ₦2.06tn in May 2026, as households increasingly relied on borrowing amid persistent cost pressures, weak consumer spending and a challenging economic environment.

The figure, derived from the latest Central Bank of Nigeria (CBN) Economic Report for May 2026, represents 64.78 per cent of the ₦3.18tn total consumer credit outstanding during the month.

According to the apex bank, consumer credit increased by 1.60 per cent, rising from ₦3.13tn in April to ₦3.18tn in May. This means outstanding consumer credit expanded by approximately ₦50bn in a single month.

The CBN attributed the increase to growth in both personal and retail loans.

It said, “Consumer credit outstanding increased by 1.60 per cent to N3.18tn from N3.13tn in the preceding month, driven by growth in personal and retail loans, which rose by 1.98 and 0.90 per cent, respectively.”

The apex bank added that personal loans remained the dominant component of consumer credit, accounting for 64.78 per cent, while retail loans represented 35.22 per cent.

Based on these proportions, personal loans stood at approximately ₦2.06tn, while retail loans accounted for about ₦1.12tn.

The figures indicate that personal borrowing increased by roughly ₦40bn between April and May, reflecting the continued expansion of credit accessed directly by households.

The development is particularly significant given the weakness recorded in economic activity during the period.

The CBN reported that its composite Purchasing Managers’ Index (PMI) stood at 49.60 points in May, marginally higher than 49.40 points in April but still below the 50-point threshold that separates expansion from contraction.

The bank linked the contraction to subdued demand, declining new orders and elevated production costs, while weak consumer spending and rising energy costs continued to weigh on the industry and services sectors.

Inflation also remained elevated, with headline inflation rising to 15.93 per cent in May, from 15.69 per cent in April. The CBN attributed the increase to persistent cost pressures and higher energy prices, although month-on-month inflation slowed from 2.13 per cent to 1.75 per cent.

The combination of rising personal borrowing and weak consumer demand points to growing reliance on credit by households facing financial pressures.

Findings from the Enhancing Financial Inclusion & Advancement report further highlight the changing nature of borrowing in Nigeria.

The 2026 Access to Financial Services in Nigeria Survey found that 40.8 per cent of Nigerians borrowing from formal financial institutions used the loans mainly for coping and consumption, up from 31.7 per cent in 2023.

The 9.1 percentage-point increase made coping and consumption the largest purpose for formal borrowing, overtaking productive enterprise borrowing, which fell from 40.2 per cent to 34.3 per cent.

Borrowing for household assets also declined, falling from 25.2 per cent to 23.4 per cent.

The report warned that credit must be channelled towards activities capable of improving household and business productivity rather than deepening financial distress.

It stated: “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.”

Overall, formal credit usage increased from 6 per cent of adults in 2023 to 10 per cent in 2026, with an estimated 11.9 million Nigerians borrowing from regulated financial institutions.

When informal sources were included, 36 per cent of Nigerian adults had access to some form of credit.

Credit usage also increased significantly among several groups. Borrowing among informally employed Nigerians tripled from 5 per cent to 15 per cent, while credit use among Nigerians aged 18 to 35 increased from 4 per cent to 10 per cent.

Among business owners, borrowing rose from 4 per cent to 10 per cent, while farmers’ credit use increased from 2 per cent to 6 per cent.

But the growing access to credit came with a worrying repayment burden.

The survey found that 45.8 per cent of formal-credit users experienced some or serious repayment stress, while an even higher 83.8 per cent reported ongoing financial stress.

The figures suggest that while credit is becoming increasingly accessible to Nigerians, a significant share of borrowing is being used to cope with financial pressure and meet consumption needs, rather than to build productive capacity raising concerns about household indebtedness and the sustainability of consumer borrowing.