Consumption drives 41% of Nigerians’ formal borrowing – Report - Punch Newspapers

Four in every 10 Nigerians borrowing from formal financial institutions now take loans mainly for consumption and coping needs, as rising financial pressures increasingly push credit away from productive activities, a new report has shown. The 2026 Access to Financial Services in Nigeria Survey by Enhancing Financial Inclusion & Advancement revealed that 40.8 per cent of formal borrowers used loans for coping and consumption, up sharply 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. Borrowing for household assets also declined from 25.2 per cent to 23.4 per cent. The report warned, “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 survey, unveiled recently in Abuja, covered 18,679 adults across the 36 states and the Federal Capital Territory. Data collection was conducted between April and June 2026 under the supervision of the National Bureau of Statistics. Presenting the findings, EFInA Chief Executive Officer, Foyinsolami Akinjayeju, said the results showed that Nigeria must move beyond simply counting the number of people with access to financial services and examine whether such access was improving their financial well-being. Formal credit use increased from six per cent of adults in 2023 to 10 per cent in 2026, with about 11.9 million Nigerians borrowing from regulated providers. When informal sources were included, 36 per cent of adults had access to some form of credit.See more Punch stories on Google.Add Punch on Google Credit use among informally employed Nigerians tripled from five per cent to 15 per cent, while borrowing among people aged 18 to 35 rose from four per cent to 10 per cent. Business owners recorded an increase from four per cent to 10 per cent, while farmers rose from two per cent to six per cent. However, the report found significant distress among 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. Akinjayeju said the widening gap between access and financial health showed why the next phase of financial inclusion must focus on outcomes. Overall financial inclusion reached 79 per cent, equivalent to about 94.2 million adults, while formal inclusion stood at 73 per cent. Yet, only about a quarter of adults were financially healthy. Chairman of the EFInA Board, Dr Agnes Martins, similarly said financial access should be regarded as the beginning rather than the ultimate objective of inclusion. Fiscal, monetary coordination deepens as Nigeria battles inflation AXA Mansard: Nigeria’s insurance gap leaves economy exposed to shocks Nigeria’s energy crisis killing business “Access is only the beginning of the journey; it is not the destination,” she said, stressing the need for financial products to deliver measurable improvements in consumers’ lives. The Governor of the Central Bank of Nigeria, Olayemi Cardoso, represented by the Director of Consumer Protection and Financial Inclusion, Dr Aisha Isa Olatinwo, said inflation remained a major obstacle to meaningful financial inclusion because it eroded purchasing power and savings and increased borrowing costs. Cardoso said the CBN was focusing on price stability while strengthening consumer protection, financial inclusion and the broader regulatory environment needed to improve trust in financial services. Also speaking, the Director-General of the National Pension Commission, Omolola Oloworaran, said financial inclusion must extend beyond bank accounts and payments to long-term financial security. She said pension participation increased from 7.8 per cent of Nigerian adults in 2023 to 9.1 per cent in 2026, meaning roughly nine in every 10 adults remained outside formal pension arrangements. Oloworaran argued that simply opening an account was insufficient if consumers could not fund it consistently, calling for products suited to traders, farmers, drivers, artisans and other workers in the informal economy. Vice-President, Corporate Affairs at Moniepoint, Edidiong Uwemakpan, said technology and alternative data could help expand responsible lending to people and businesses historically excluded by conventional collateral requirements. She said a Moniepoint impact survey found that 62 per cent of female entrepreneurs surveyed who received financing obtained their first formal business loan through the company, while 83 per cent of users reported improved quality of life and 85 per cent expressed greater confidence in achieving their financial goals. Former CBN governor and Emir of Kano, Muhammadu Sanusi II, however, cautioned that expanding access to accounts and credit would have limited impact unless financial flows were connected to productive economic activity. “Opening an account, moving money, is not the same as earning money. It’s not the same as talking about poverty,” Sanusi said. He also identified inflation as a major threat to households, urging policymakers to maintain price stability while creating conditions that allow financial services to support agriculture, manufacturing and other productive sectors. Germany’s Deputy Head of Mission to Nigeria, Johannes Lehne, said Germany, including through its development cooperation, remained committed to supporting Nigeria’s financial inclusion agenda, particularly initiatives affecting women and agriculture. The EFInA report recommended that policymakers shift attention from access alone to financial resilience, responsible credit, insurance, savings and pensions. Sami Tunji Sami Tunji is a Senior Business Correspondent at Punch Newspapers with about five years of experience in data-driven reporting. He covers finance, ICT, and broader macroeconomic issues, combining analytical insight with clear storytelling. Sami’s work reflects strong editorial judgment, professional development, and a commitment to accurate and informative business journalism.

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