ISSUES IN BORROWING FOR CONSUMPTION  

A new report puts numbers to the increasing battle for survival  

The recently released 2026 Access to Financial Services in Nigeria (A2F) Survey has revealed a major structural shift in the country’s credit ecosystem. Conducted by Enhancing Financial Innovation & Access (EFInA) in collaboration with the National Bureau of Statistics (NBS), the survey covered a sample of 18,679 adults across the 36 states and the Federal Capital Territory (FCT) and tracked changes in borrowing behaviour between 2023 and 2026. The survey established a rise in consumption borrowing corresponding with a noted drop in credit channeled into farming, starting a business, or capital expenditure. It also found a significant distress among the borrowers. About 45.8 per cent of formal credit users reported some or serious repayment stress, while 83.8 per cent experienced ongoing financial stress.

The increase in the percentage of those borrowing for personal needs (as against business needs) is concerning. But the base, the starting point, was already high in 2023. This points to an underlying challenge that has gotten worse. When people borrow to pay rent, school fees and medical bills, that signifies low savings, low disposable income, limited insurance cover and low social protection. As the Governor of the Central Bank of Nigeria ((CBN), Mr. Olayemi Cardoso explained recently, inflation remains a major obstacle to meaningful financial inclusion because it erodes the purchasing power and savings while increasing borrowing costs.

Going by the survey report, approximately 41 per cent of formal borrowers used loans for coping and consumption, a sharp rise 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. Such consumption patterns centre around basic essentials, including food, rent, school fees and medicals, among others. The data highlighted how mounting macroeconomic pressures and the rising cost of living are forcing consumers to utilise credit to meet daily household necessities rather than for economic expansion.

It is troubling that such a huge number of Nigerians now secure loans from formal financial institutions mainly for coping needs, as rising financial pressures increasingly push credit away from productive activities. A similar report, the Direct Nigeria Consumer Credit Insight 2025, had also revealed that most Nigerians borrow for basic living essentials rather than for business expansion. That report identified the primary drivers within consumption borrowing to include rent, emergency medical bills, and school fees, highly concentrated among formally employed adults earning under N200,000 monthly. 

The fact that the structural reforms in the economy introduced by the President Bola Tinubu government since May 2023 has stabilised the macroeconomic fundamentals cannot be controverted. However, the consequences of the reforms are severe for most ordinary Nigerians. There are clear indications that the side effects of the reforms have increased the vulnerability of Nigerians, especially the poorest, who do not have collateral for formal loans and sometimes forced into the arms of loan sharks. The erosion of the purchasing power has also pushed millions of people into the poverty trap.

This much was underscored in a recent report by Agora Policy, which revealed that the removal of petrol subsidy significantly worsened poverty levels, pushing the national poverty headcount to about 63 per cent. According to the report, household consumption declined across the board, following both the removal of fuel subsidy and electricity tariff adjustments. The 2026 Access to Financial Services in Nigeria Survey is therefore another wake-up call for the government, at all levels. It is trite that consumption borrowing yields no economic multipliers, and absorbs scarce financial resources needed to stimulate economic growth.

As things stand, Nigeria is currently faced with an existential affordability crisis for essentials. As a result, most people are desperate to survive the hard times while awaiting the promised Eldorado by politicians. After all, investment in business growth and further wealth creation is for the living. But as many analysts also contend, Nigeria must move beyond simply counting the number of people with access to financial services and examine whether such access is improving well-being by building their productive capacity. An economy canånot be said to be recovering when people borrow merely to survive.