Debt is the amount of money that a person or entity owes, according to Merriam‑Webster. In Nigeria, debt burdens can become a major problem for individuals and businesses, leading to financial hardship and even bankruptcy. The increased adoption of e‑payment systems over the past few years has given rise to more lending platforms, which in turn have spawned loan sharks who make it easy to obtain loans without collateral. This has contributed to a spike in borrowing among many youths. Experts link the growth of heavy debt burdens to poor financial decisions and discuss the psychological and financial effects of taking loans.
In an interview with The Led Coach, Financial Literacy with Temi, Mrs. Temiremi Igboamagh emphasizes that “money is never enough.” She notes that even high‑income earners need a solid financial plan because wealth cannot purchase everything. Igboamagh focuses on the plight of business owners, warning that rising interest rates increase all expenses, including loan costs. She argues that the only way to avoid debt, if possible, is through proper financial planning—not merely having a business strategy, but setting clear goals, budgeting, and estimating long‑term revenue and expenditures. “After doing that, then you cut your clothes according to your size,” she says, meaning that financial decisions should match one’s capacity. She stresses that any individual or business in debt is at risk when interest rates rise.
Igboamagh, a chartered accountant and former PricewaterhouseCoopers consultant, explains that the inability to service debt creates trouble for borrowers. She distinguishes between predatory loan sharks and structured bank debt, noting that bad debts worsen when high interest rates force individuals to take on additional loans to cover existing obligations. A certified planner with the Corporate Finance Institute, she advises that anything unaffordable after proper planning should be let go.
Personal finance coach and Boardroom convener Kelechi Godfrey highlights the impact of the current 17.5 % interest rate on loan repayment. He urges individuals to assess why they need a loan, citing reasons such as healthcare emergencies, lifestyle inflation, and a lack of intentionality. “Borrowing without a clear purpose is essentially surcharging your future,” he warns. Godfrey stresses that loans should be used to acquire assets or generate income; otherwise, they become a recurring problem. He points out that the real issue is not obtaining a loan but the ability to repay it on time. Banks require proper documentation of an individual’s or business’s financial background, including income statements and pay‑cheque frequency. When borrowers lack stable income, they may resort to soliciting funds from friends, family, or additional borrowing, exacerbating the problem.
Godfrey also notes that a lack of a proper repayment plan is a major obstacle. He recommends having multiple repayment sources—such as a primary job, side hustles, or other income streams—to ensure timely payments. He observes that banks monitor account inflows to deduct repayments automatically, underscoring the importance of organized financial planning to meet loan obligations.
Thrive Financial CEO Olayemi Olukayode advises those already burdened by debt to stop borrowing and confront lenders directly. Renegotiating loan terms benefits both borrower and lender. He suggests evaluating income and expenses to identify the root cause of debt, whether low earnings or overspending, and recommends increasing income through side hustles or raises while cutting unnecessary expenses.
Overall, experts agree that anyone uncertain about a loan or needing help managing finances should consult a financial advisor or counsellor. Professional guidance can help individuals make informed decisions, avoid predatory lenders, consider alternative funding sources, and protect their financial and mental well‑being. By conducting thorough research and seeking expert advice, people can minimize the risk of bad loans and safeguard their financial health.
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