The Central Bank of Nigeria has revealed that personal loans decreased from N1.85tn in Q3 to N1.75tn in Q4 2022 due to the rise in borrowing costs. The interest rate, otherwise known as the Monetary Policy Rate (MPR), has been increased from 11.5% to 18% in the past six months to control the escalating inflation, yet Nigeria’s inflation figures have continued to rise. In April, the inflation rate reached a new high of 22.22%. As a result, consumer credit fell by 3.5% from N2.4tn in Q3 to N2.32tn in Q4 2022.
The report states that the decline in consumer credit was a result of the high cost of borrowing following a 250-basis points policy rate hike in the period. The decline lowered consumer credit as a percentage of total claims on the private sector by 0.6%, from 8.7% in the preceding quarter to 8.1% in Q4.
