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Category: Economy

  • Consumer Credit Surge: Nigerians Borrowing Hits N4.42 Trillion

    Consumer Credit Surge: Nigerians Borrowing Hits N4.42 Trillion

    In a notable economic shift, Nigeria’s consumer credit outstanding surged by a substantial 26.29%, reaching N4.42 trillion in November 2024, according to the latest Central Bank of Nigeria (CBN) Monthly Economic Report. This significant increase from the previous month’s N3.5 trillion underscores the growing reliance of Nigerian households on credit to navigate rising living costs.

    The data reveals a compelling narrative: as inflation continues to exert pressure on household budgets, more Nigerians are turning to credit, particularly personal loans, to manage essential expenses. “Consumer credit outstanding increased significantly by 26.29 per cent to N4.42 trillion from the level in the preceding month, due largely to inflation expectations,” the CBN report stated.

    Personal Loans Lead the Charge

    The most striking growth was observed in personal loans, which skyrocketed by 37.76% to N3.32 trillion from N2.41 trillion in October 2024. These loans, frequently used for day-to-day household expenditures, now account for a dominant 74.95% of the total consumer credit. Conversely, retail loans, which fund purchases of goods and services, experienced a more moderate increase of 1.83%, rising to N1.11 trillion.

    As a news writer, examining these figures, I can’t help but consider the human element. For many Nigerians, these loans represent a lifeline, enabling them to afford necessities like rent, food, and healthcare amidst escalating prices. The surge in personal loans is a direct reflection of the financial strain faced by countless families.

    Inflation and Monetary Policy

    The CBN’s Governor, Olayemi Cardoso, has acknowledged the challenges posed by inflation, which has prompted aggressive monetary tightening. The Monetary Policy Rate (MPR) has been raised by 875 basis points in 2024, moving from 18.75% to 27.50% by November. While these measures aim to stabilise the economy by curbing excess liquidity, they also place considerable pressure on borrowers.

    Analysts suggest that the slower growth of retail loans indicates a cautious approach to discretionary spending. While consumers are still purchasing goods and services, the high cost of living may be deterring them from making non-essential purchases.

    Balancing Credit Expansion and Financial Stability

    The CBN’s efforts to enhance financial inclusion and credit accessibility are commendable. However, concerns about rising debt levels and repayment sustainability persist. Economic experts urge the central bank to implement measures that balance credit expansion with financial stability. It is crucial to ensure that increased borrowing does not lead to higher default rates, particularly as interest rates remain elevated.

    The sharp rise in personal loans, coinciding with the CBN’s interest rate hikes, highlights the complex interplay between monetary policy and consumer behaviour. Ultimately, the goal is to create an environment where credit empowers individuals without jeopardising their financial well-being.

    As we move forward, it is essential to monitor these trends closely. The data provides a window into the economic realities faced by Nigerians, and informed policy decisions are crucial to navigating these challenges effectively.

  • Loan App Surge: 380 Lenders Approved, Consumer Fears Grow

    Loan App Surge: 380 Lenders Approved, Consumer Fears Grow

    The landscape of digital lending in Nigeria is undergoing a dramatic transformation, with the number of approved loan app soaring to 380 this February, a significant jump from 320 in October of the previous year. This surge, reflecting approvals from both the Federal Competition and Consumer Protection Commission (FCCPC) and licenses granted by the Central Bank of Nigeria (CBN), signals a burgeoning appetite for accessible financial services. However, this growth is shadowed by a rising tide of consumer apprehension regarding the operational ethics of some digital lenders.

    According to the FCCPC’s database, a substantial 322 digital lenders have received full approval, while 42 operate with conditional approval. Additionally, 16 companies are licensed by the CBN, culminating in the 380 approved entities. While this expansion suggests increased financial inclusion, it also raises critical questions about regulatory oversight and consumer protection.

    “It is not enough to issue a licence or grant approval based on the fact that they have met certain conditions set by the FCCPC, the regulator needs to monitor these lenders and ensure that they are operating in ethical ways, especially how they disburse loans and how they recover their loans,” stated Mr. Gbolagunte Ajayi, a financial analyst. His words underscore a growing sentiment that regulatory action must extend beyond mere registration to encompass active policing of lending practices.

    Consumer Experiences: A Growing Sense of Unease

    The concerns voiced by consumers are not merely abstract fears. They reflect real-life experiences, often laden with emotional distress. My chats with a few people regarding the saving capabilities of these loan apps tended to view them as a trap rather than a saviour.

    Omowunmi revealed that she obtained a loan from a well-known vendor out of an urgent need. She voiced her displeasure with the time element and interest rate. “I was offered N44,000 to refund N76, ooo over a two-month period,” she said. This ran counter to the advertisement that said I might receive N100,000 and repay N100,400 over three months. Kemi herself expressed dissatisfaction about the unwanted messages and calls she received from the agent urging her to take out a loan in order to obtain a reduced interest rate.

    Read Also: Nigerian Students Get Two-Year Grace Period for Student Loan Repayment

    Daniel bemoaned the automated calls that occur when a loan default occurs. “Do they think I will be forced to pay for all the calls? I receive up to 35 calls every day telling me to pay. When I phoned their centre to report that my device had a problem and I was unable to access my account to make a payment, the representative asked me to borrow a device, log into my account, and make the payment. She then provided her account information to complete the payment, but regrettably, it was unsuccessful. When the loan was past due, I received forty calls from a machine.”

    These narratives paint a picture of a sector where the lines between legitimate lending and predatory practices blur. The use of harassment and threats, reminiscent of unregulated “loan sharks,” by some licensed apps further exacerbates consumer anxiety. This raises a critical question: how can regulators ensure that the benefits of digital lending, such as increased financial access, are not overshadowed by unethical practices that exploit vulnerable individuals?

    Regulatory Response and Economic Implications

    The FCCPC acknowledges the challenges and has taken steps to address them. Adamu Abdulahi, Executive Commissioner of Operations at the FCCPC, emphasised the commission’s efforts to identify and hold loan app operators accountable through its Interim Regulation. He also mentioned that 47 loan apps have been delisted from the Google Play Store, and 88 are under close watch. “The main aim of the registration and approval of digital lenders in the country is to identify the companies behind the apps through its Interim Regulation to be able to hold them responsible for any infraction,” he clarified.

    Despite the challenges, the FCCPC recognises the vital role loan apps play in the Nigerian economy. These platforms offer crucial financial services to individuals who may be excluded from traditional banking systems, contributing to financial inclusion. However, a balance must be struck between fostering innovation and safeguarding consumer rights.

    The rapid expansion of the digital lending sector necessitates a robust regulatory framework that not only approves lenders but also actively monitors their operations. As we navigate this evolving financial landscape, it is imperative that consumer protection remains at the forefront, ensuring that the promise of accessible finance does not come at the cost of ethical integrity.

  • Inflation Rate Drops Significantly After CPI Rebasing

    Inflation Rate Drops Significantly After CPI Rebasing

    Nigeria’s inflation rate has experienced a significant drop, landing at 24.48% year-on-year in January 2025. This dramatic shift follows the rebasing of the Consumer Price Index (CPI), a move that officials say provides a more accurate reflection of the nation’s economic landscape. The National Bureau of Statistics (NBS) unveiled the new figures on Tuesday, revealing a stark contrast to the 34.80% recorded in December 2024 under the previous methodology.

    This news, while potentially offering a glimmer of hope, also raises important questions about the real impact on Nigerians’ daily lives.

    “The rebased inflation figures provide a more accurate representation of consumer spending patterns and economic realities in the country,” stated Adeyemi Adeniran, the Statistician-General of the Federation, during a press briefing in Abuja. This rebasing, a crucial statistical exercise, involves updating the reference year and revising the basket of goods and services used to calculate inflation. Essentially, it’s like recalibrating the economic compass to ensure it points true north. The previous index, it seems, had become outdated, failing to capture the dynamic shifts in consumer behaviour and market trends.

    The January figures reveal urban inflation at 26.09% and rural inflation at 22.15%. While these numbers are still significant, they represent a considerable decrease from the previously reported figures. Perhaps most notably, the rebased food inflation index, a critical indicator given its impact on household budgets, now stands at 26.08%, down from a staggering 39.84% in December. This offers a potential sign of relief, though the real-world impact on food prices remains to be seen. Similarly, core inflation, which excludes volatile agricultural produce and energy prices, has also seen a decline, settling at 22.59%.

    Read Also: Nigeria’s Headline Inflation Hits 34.80% in December 2024, Marking Fifth Year of Rising Prices

    I can’t help but wonder, though, what this statistical adjustment means for the average Nigerian. While economists might celebrate the improved accuracy of the data, the lived experience of many suggests that the cost of living remains stubbornly high. While the numbers paint a more optimistic picture, the empty pockets and strained budgets of families across the nation tell a different story. This is where the human angle becomes crucial. We must ask: Does this statistical drop translate to more affordable groceries, cheaper transportation, or less financial strain on households?

    The NBS’s rebasing of the CPI is undoubtedly a vital step towards ensuring the relevance of economic data. As Adeniran explained, “The previous base year did not adequately capture the changes in consumer behaviour, emerging market trends, and shifts in spending patterns over time.” This acknowledgement highlights the importance of regularly updating our economic tools to reflect the ever-changing realities on the ground.

    However, the question remains: what now? While the numbers offer a sense of direction, the path forward requires more than just statistical adjustments. The government’s policies, including the Central Bank of Nigeria’s monetary tightening measures and fiscal interventions, will play a critical role in shaping future inflation trends. The real test lies in whether these policies can translate the statistical improvement into tangible benefits for the Nigerian people. Only time will tell if this statistical recalibration will lead to a genuine easing of the economic pressures felt by so many.

  • 2025 Budget Revised: N54.9 Trillion Approved with Key Adjustments

    2025 Budget Revised: N54.9 Trillion Approved with Key Adjustments

    The National Assembly has recalibrated the 2025 budget, making key adjustments to expenditure allocations while maintaining the overall budget size at N54.9 trillion. This decision, announced on Tuesday, follows a motion presented by Senator Adeola Olamilekan and Hon. Abubakar Kabir, chairpersons of the respective appropriations committees, citing the need for accuracy and alignment with national priorities.

    The initial budget passed on February 13th, has undergone revisions to address discrepancies in capital and recurrent expenditure. While the total expenditure remains consistent, the revised bill allocates N13.588 trillion to recurrent expenditure, a N524 billion increase. Correspondingly, capital expenditure has been adjusted downwards by the same amount, now standing at N23.439 trillion. This shift, as legislative sources suggest, reflects a necessary correction of technical errors in the original breakdown, particularly concerning funding for essential sectors like salaries, pensions, and operational costs.

    “The adjustments were crucial to ensure the budget accurately reflects our commitment to both efficient spending and developmental projects,” a source close to the appropriations committee told me. “We needed to strike a balance between meeting immediate needs and investing in the future.”

    This sentiment underscores the delicate balancing act lawmakers face. While capital expenditure drives long-term growth through infrastructure development and other key projects, adequate recurrent funding is crucial for maintaining essential government services and fulfilling obligations to public sector employees. The revised allocations suggest a prioritization of these immediate needs, perhaps reflecting current economic realities.

    The 2025 budget journey began with President Tinubu’s initial proposal of N49.7 trillion. This figure was later revised upwards to N54.2 trillion on February 5th, 2024, following projections of increased revenue from agencies like the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS). President Tinubu, in a letter to the National Assembly, detailed the expected contributions: N1.4 trillion from FIRS, N1.2 trillion from NCS, and N1.8 trillion from other government agencies. The final approved budget of N54.99 trillion represents a further increase following parliamentary deliberations.

    The approved budget breakdown reveals a complex fiscal landscape: Total Expenditure: N54.99 trillion; Statutory Transfers: N3.65 trillion; Recurrent (Non-Debt) Expenditure: N13.64 trillion; Capital Expenditure: N23.96 trillion; Debt Servicing: N14.32 trillion; and Fiscal Deficit: N13.08 trillion. The significant allocation to debt servicing highlights the ongoing challenge of managing Nigeria’s debt burden, a factor that inevitably influences budgetary decisions.

    The implications of these revisions are far-reaching. While the increased recurrent expenditure may provide some relief in critical sectors, the reduction in capital expenditure raises questions about the pace of infrastructure development. It remains to be seen how these adjustments will impact the lives of ordinary Nigerians, who rely on government spending for essential services and economic opportunities. The coming months will be crucial in observing the implementation of this budget and its ultimate effect on the nation’s economic trajectory. The bill is now awaiting President Tinubu’s assent.

  • Capital Inflow Dips to $1.63 Billion in November Amidst Investor Concerns

    Capital Inflow Dips to $1.63 Billion in November Amidst Investor Concerns

    Nigeria’s allure for international investors appears to be waning, as capital inflow into the nation plummeted to $1.63 billion in November 2024, a noticeable 13.8% decrease from the $1.89 billion recorded in October. This concerning trend, revealed in the Central Bank of Nigeria’s (CBN) Economic Report for November 2024, paints a picture of growing investor hesitancy towards the Nigerian market.

    The CBN report clearly outlines the downward trend: “Capital inflow declined to US$1.63 billion in November 2024, from US$1.89 billion in October 2024. A breakdown showed that portfolio investment inflow decreased to US$1.36 billion from US$1.41 billion due, mainly, to lower purchases of equity and shares. Similarly, foreign direct investment decreased to US$0.12 billion from US$0.18 billion in October 2024. ‘Other investments,’ mainly loans, also decreased to US$0.15 billion from US$0.30 billion in the preceding month.”

    I’ve observed over the past five years how crucial foreign investment is for a nation’s economic health. This recent decline raises some red flags. The numbers themselves tell a story of dwindling confidence: Portfolio investment, the lifeblood of the stock market, shrank to $1.36 billion. Even more alarming is the significant drop in Foreign Direct Investment (FDI), which signifies long-term commitment to a nation’s economy, falling to a meagre $0.12 billion. This suggests that investors are becoming increasingly wary of establishing or expanding operations within Nigeria. “Other investments,” primarily loans, also saw a substantial reduction, dropping by half to $0.15 billion.

    Several factors contribute to this unsettling development. Firstly, the CBN’s monetary policies, particularly regarding foreign exchange and interest rates, are creating an environment of uncertainty for investors. The volatility of the Naira, Nigeria’s currency, adds another layer of risk, making it difficult for investors to accurately project their returns. Globally, high interest rates in developed economies are luring investors away from emerging markets like Nigeria, offering seemingly safer havens for their capital. And, unfortunately, the persistent security and political challenges within Nigeria continue to dampen investor enthusiasm.

    Read Also: Nigeria Faces Foreign Investment Drought Amidst Negative Real Interest Rates

    From a human perspective, this decline in investment has real-world consequences. Fewer foreign investments translate to fewer jobs, slower infrastructure development, and a potential strain on government resources. It’s a ripple effect that touches the lives of everyday Nigerians. We need to address the root causes of this decline to restore investor confidence and unlock Nigeria’s vast economic potential. This requires a concerted effort to stabilize the Naira, create a more predictable regulatory environment, and address the security concerns that are plaguing the nation. The future prosperity of Nigeria depends on it.

  • Trump says US auto tariffs to be around 25%

    Trump says US auto tariffs to be around 25%

    US President Donald Trump expanded his offensive against trading partners on Tuesday, threatening 25 percent tariffs on imported cars, and similar or higher duties on pharmaceuticals and semiconductors.

    Trump has announced a broad range of levies on some of the biggest US trading partners since taking office in January, arguing that they will help tackle unfair practices — and in some cases using the threats to influence policy.

    He recently pledged 10 percent duties on all goods coming from China, and 25 on steel and aluminum imports.

    At his Mar-a-Lago resort in Florida, he told reorters that tariffs on the automobile industry will “be in the neighborhood of 25 percent,” with specifics to come around April 2.

    Asked about threatened tariffs on pharmaceuticals and chips, Trump said: “It’ll be 25 percent and higher, and it’ll go very substantially higher over (the) course of a year.”

    He added he wanted to give affected companies time to bring their operations to the United states, saying that he had been contacted by major firms that “want to come back”.

    The president also said that Washington’s trading partners could avoid being taxed by investing in factories in the United States.

    “We want to give them time to come in,” he said. “When they come into the United States and they have their plant or factory here, there is no tariff. So we want to give them a little bit of a chance.”

    Experts have warned it is often Americans who end up paying the cost of tariffs on imports, rather than foreign exporters.

    About 50 percent of the cars sold in the United States are manufactured within the country. Among imports, about half come from Mexico and Canada, with Japan, South Korea and Germany, also major suppliers.

    – Asia cautious –

    Trump’s tariffs threats have been cautiously received in Asia, home to some of the main US suppliers of the potentially affected industries.

    Yoshimasa Hayashi, Tokyo’s top government spokesman, told reporters “with regard to automobile tariffs, we have raised the issue with the US government, taking into account the importance of Japan’s auto industry.

    “Japan will first take appropriate action while carefully examining the specific details of the measures,” he added.

    Taiwan, a global powerhouse in semiconductor production that Trump has accused of stealing the US chip industry, also remained cautious.

    “The scope of products subject to tariffs has not yet been clarified. We will continue to monitor the direction of US policies and assist Taiwan’s industries,” Taipei’s economic ministry said in a statement.

    The island’s government had previously said it would boost investment in the United States as it sought to head off Trump’s duties.

    – EU visit –

    Trump said he was pleased to see the EU “reduce their tariffs on cars to the level we have.”

    “The EU had 10 percent tax on cars and now they have a 2.5 percent tax, which is the exact same as us… If everybody would do that, then we’d all be on the same playing field,” he said.

    “The EU has been very unfair to us. We have a trade deficit of $350 billion, they don’t buy our cars, they don’t take our farm products, they don’t take almost anything… and we’ll have to straighten that out,” he added.

    The US trade deficit in goods with the EU was over $235 billion in 2024, according to Commerce Department data.

    On the other hand, the United States had a trade surplus of $109 billion with the EU in services in 2023, the last year with consolidated data, according to European Commission data.

    The European Commissioner for Trade and Economic Security, Maros Sefcovic, arrived in Washington on Tuesday and will meet with Trump’s Commerce Secretary Howard Lutnick and White House Trade Representative Jamieson Greer.

  • Naira down to N1,565/$ in parallel market

    Naira down to N1,565/$ in parallel market

    THE Naira yesterday depreciated to N1,565 per dollar in the parallel market from N1,555 per dollar on Monday.
    But the Naira appreciated to N1,510.33 per dollar in the Nigerian Foreign Exchange Market (NFEM).

    Data published by FMDQ showed that the indicative exchange rate for the Naira fell to N1,510.33 per dollar from N1,512.58 per dollar on Monday, indicating a N2.25 appreciation for the naira.

    Consequently, the margin between the parallel market and NFEM rate widened to N54.67 per dollar from N42.42 per dollar Monday.

  • FG urges traders to reduce food prices

    FG urges traders to reduce food prices

    The Federal Government has urged retailers to reflect the reduction in food prices and shun exploiting consumers.

    Abubakar Kyari, the Minister of Agriculture and Natural Resources, stated this on Tuesday during the 2025 Wheat Farmers Green Field Day at Dabi village in Ringim Local Government Area of Jigawa.

    He decried the nonchalant attitude of retailers to reflect the reduction in their sales despite the drop in prices, describing it as unpatriotic and unacceptable.

    “The federal government is aware of the significant drop in the prices of food items across major markets, particularly for essential commodities such as flour, sugar, rice and pasta.

    “However, it is deeply concerning that many retailers, bakers, and shop owners have refused to reflect this reduction in their selling prices, thereby denying Nigerians the relief they deserve.

    “In previous months, stakeholders in the retail value chain raised concerns about the rising cost of food items. Now that the prices have dropped, such as flour, which fell from N81,000 per bag to below N60,000, and spaghetti, which has fallen from N20,000 to N15,000.

    “It is only fair and just to let consumers benefit from food price reduction,” Kyari said.

    He reiterated the government’s commitment to ensure food availability and engage with relevant stakeholders to reflect the current market realities.

    The News Agency of Nigeria (NAN) reports that the event was organised in collaboration with the Flour Milling Association of Nigeria, the federal government and Jigawa state government.

  • Pension fund exposure in FGN securities rise by 18.5% to N14.1trn

    Pension fund exposure in FGN securities rise by 18.5% to N14.1trn

    The Federal Government, FGN Securities’ Net Asset Value, NAV, under the Pension Fund Administrators, PFAs’, investment rose significantly by 18.5% to N14.1 trillion at the end of December 2024 from N18.3 trillion in the corresponding period of 2023.

    Breakdown of the latest data released by the National Pension Commission, PenCom, shows that the FGN Securities accounted for 62.6% of the total pension fund assets.

    The total pension fund assets for the year 2024 stood at N22.5 trillion indicating a 22.9% increase from N18.3 trillion recorded in 2023.

    The surge in Federal Government Securities was attributed to increased supply by the Debt Management Office, DMO, to meet the Federal Government’s domestic funding targets and address the budget deficit in the N9.1 trillion budget for 2024.

    During the year, PFAs investments in the FGN securities were driven by the relatively safe and stable returns and the prevailing yield environment.

    The average rate of the Monetary Policy Rates, MPR, which is the benchmark lending rate for the financial markets, in 2024 stood at 25.5% from 18.4% recorded in 2023.

    The FGN Securities include: Federal Government Bonds’ Hold Till Maturity, HTM; Federal Government Bonds’ Available for Sale, AFS; Treasury Bills, Agency Bonds; SUKUK Bonds (HTM); SUKUK Bonds (AFS); and Green Bonds.

    According to the report, FGN Bonds showed dominance of FGN securities, constituting the largest asset class for pension funds, accounting for 93.6% of total FGN securities in 2024. It recorded N13.2 trillion in 2024 against N11.5 trillion recorded in 2023. Treasury Bills followed in the chart recording N704 billion against N214 billion in 2023.

    SUKUK Bonds occupied the third position posting N93.6 billion from N245.6 billion recorded in 2023.

    Commenting on this development, Investment Banker & Stockbroker, Mr. Tajudeen Olayinka, said: “The increasing MPR by the Central Bank of Nigeria (CBN) created room for divestment to Government securities amid attractive yield and risk-free investment.

    “The apex banking regulating body had consistently hiked the yield on Government securities in 2024 amid the rising inflation rate and supported the government in funding its budget deficit”.

    Speaking as well, Ambrose Omordion,  analyst at InvestData Consulting said, “PFAs are benefiting from the weakening of the Naira and renewed investors’ confidence .The pension industry operates under stringent regulations due to the nature of handling public funds, primarily the contributions of workers meant for their retirement. “The PenCom enforces guidelines and limits to ensure the safety and security of contributors’ funds as restrictions are placed on PFAs regarding the allocation of contributors’ funds into volatile assets”.

  • Customs expands its AEO initiative to key industries

    Customs expands its AEO initiative to key industries

    The Nigeria Customs Service (NCS) has expanded the Authorized Economic Operators (AEO) programme to include manufacturers, logistics companies, and agricultural firms.

    The expansion aims to accommodate more players in the maritime industry, thereby enhancing trade facilitation and boosting the country’s economic growth.

    Speaking at the launch of the AEO programme in Lagos, Comptroller-General of Customs, Mr. Adewale Adeniyi, emphasized the significance of the initiative, nothing that the programme is designed to establish Mutual Recognition Agreements (MRA) with customs administrations worldwide, ensuring smoother cross-border trade.

    He stated: “Certified operators will benefit from streamlined customs procedures, reduced physical inspections, and priority treatment during clearance.” Adewale added that the initiative not only benefits the private sector but also enhances the NCS’s risk management capabilities and resource allocation efficiency.

    Adeniyi also explained that the AEO program, as defined by the World Customs Organization (WCO), certifies companies that comply with globally recognized supply chain security standards.

    “This program represents a shift from traditional, transaction-based customs controls to a more comprehensive, compliance-driven approach.

    “The success of our pilot phase, which commenced in April 2023, has been remarkable.”

    According to the Comptroller-General, six pilot AEO companies recorded significant growth, with collective trade value soaring to N653.8 billion in 2024 from N185 billion in 2023. Correspondingly, customs revenue from these companies increased from N18.4 billion to N51.1 billion, contributing to the overall revenue surge from N3.2 trillion to N6.1 trillion within the same period.