The Central Bank of Nigeria (CBN) has revealed that a staggering 95.66% of bank debtors borrowed from microfinance banks (MFBs) as of September 2024. This dominance highlights the critical role MFBs play in Nigeria’s lending ecosystem, particularly for individuals and small businesses.
Out of the 6,537 total debtors recorded across all creditor types, 6,253 were linked to MFBs, reflecting their pivotal role in providing access to credit. However, the data shows a slight month-on-month decline in MFB debtors, dropping from 6,573 in August 2024 to 6,253 in September 2024. Year-on-year, the number of MFB debtors has decreased by 26.4%, from 8,500 in September 2023.
The drop in borrowers is largely attributed to rising interest rates, which have made credit more expensive and discouraged borrowing. Since assuming office, CBN Governor Olayemi Cardoso has overseen six consecutive increases in the monetary policy rate, elevating it from 18.75% in February 2024 to 27.50% by November 2024. These measures aim to combat rising inflation, which reached 34.80% in December 2024.
The elevated interest rates have led to higher borrowing costs, potentially deterring individuals and businesses from seeking loans. This is reflected in the overall decline in debtor numbers across various financial institutions. Microfinance banks remain the dominant creditors, accounting for about 96% of all debtors in September 2024.
In contrast, deposit money banks saw their debtor numbers fall significantly, from 498 in September 2023 to just 155 in September 2024, marking a 68.9% year-on-year decline. Other creditor types showed mixed results, with finance houses experiencing notable growth and non-bank financial institutions seeing a modest increase.
Individuals remain the largest group of borrowers, accounting for 5,692 of the total 6,537 debtors in September 2024. The data also reveals that small businesses showed growth in secured loan values, rising 68% year-on-year from N3.08bn in September 2023 to N5.18bn in September 2024.
The rise of digital loan applications has influenced borrowing patterns, with these platforms offering quick, collateral-free loans despite concerns over high interest rates and aggressive recovery practices. The total value of loans across all debtor types stood at N118.73bn in September 2024, reflecting a 4.2% year-on-year increase.
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