Outstanding personal loans in Nigeria climbed to N1.99tn at the end of June 2026, following an increase of N58.5bn in the second quarter, as rising living costs and expensive credit continued to put pressure on household finances.
An analysis of the Central Bank of Nigeria’s (CBN) Second Quarter 2026 Economic Report showed that personal loans grew by 3.03 per cent from approximately N1.93tn recorded at the end of March.
The increase contributed to a 3.26 per cent rise in total consumer credit, which expanded from N3.07tn in the first quarter to N3.17tn at the end of June, representing an additional N100bn in borrowing within three months.
The CBN attributed the growth to increases in both personal and retail loans, stating that the two categories rose by 3.03 per cent and 4.10 per cent, respectively, during the review period.
Personal loans accounted for 62.87 per cent of total consumer credit, while retail loans represented 37.13 per cent, underscoring the dominance of personal borrowing in the country's consumer credit market.
In absolute terms, retail loans increased by approximately N46.5bn to N1.18tn in June, compared with about N1.13tn in March. Although retail lending recorded a higher growth rate, personal loans accounted for the larger share of outstanding consumer credit.
The expansion in household borrowing came against the backdrop of renewed inflationary pressures, which continued to erode consumers’ purchasing power.
According to the CBN report, headline inflation increased to 15.91 per cent in June from 15.38 per cent in March, reflecting rising prices of essential goods and services.
The apex bank linked the increase largely to higher energy and commodity prices arising from geopolitical tensions in the Middle East, which pushed up production and transportation costs.
The development further strained household budgets, particularly among Nigerians whose earnings have struggled to keep pace with the rising cost of living.
Although the CBN report did not establish whether the growth in personal loans was primarily driven by financial distress, increased consumption or improved access to credit, other financial inclusion data suggest that more Nigerians are increasingly relying on borrowing to meet everyday needs.
A report by Enhancing Financial Inclusion & Advancement (EFInA), titled 2026 Access to Financial Services in Nigeria Survey, showed that 40.8 per cent of Nigerians borrowing from formal financial institutions used the loans mainly for consumption and coping needs.
This represented a significant increase from 31.7 per cent recorded in 2023, indicating a growing shift towards borrowing to finance household expenditure rather than productive economic activities.
The survey also showed that productive enterprise borrowing declined from 40.2 per cent in 2023 to 34.3 per cent in 2026, while loans for household assets fell from 25.2 per cent to 23.4 per cent.
The report warned that the changing pattern of borrowing could undermine the developmental benefits of financial inclusion if credit increasingly becomes a means of managing financial hardship rather than building productive capacity.
“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,” the report stated.
The growing reliance on consumer credit has also occurred in an environment of relatively high lending rates, despite a marginal decline in the average prime lending rate.
The CBN reported that the average prime lending rate fell to 19.01 per cent in the second quarter from 19.37 per cent in the preceding quarter.
However, the maximum lending rate increased slightly to 34.37 per cent from 34.34 per cent, suggesting that borrowing costs remained elevated for some categories of customers.
Although these rates represent broader banking sector lending conditions rather than specific charges on personal loans, they highlight the high cost of accessing formal credit.
Meanwhile, the EFInA survey indicated that formal borrowing is gradually expanding, with the proportion of adults using credit from regulated financial institutions increasing from six per cent in 2023 to 10 per cent in 2026.
About 11.9 million Nigerians were identified as borrowers from formal financial service providers, while the inclusion of informal sources raised the proportion of adults with access to some form of credit to 36 per cent.
The survey further revealed increased borrowing across different segments of the population.
Credit use among informally employed Nigerians tripled from five per cent in 2023 to 15 per cent in 2026, while borrowing among young adults aged 18 to 35 increased from four per cent to 10 per cent.
Business owners also recorded an increase in credit utilisation from four per cent to 10 per cent, while the proportion of farmers accessing credit rose from two per cent to six per cent.
The figures suggest that while access to credit is expanding across the economy, a growing proportion of borrowers are using loans to cope with rising living costs, raising concerns about household debt sustainability and the capacity of credit to support economic productivity.
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