In a Piggyvest report on the money habits of Nigerians, it was revealed that 36% of Nigerians are owing money.
Across generations, the most likely to be in debt are the millennials and Gen Zs- the most ambitious generation as seen in the report.
While two out of five people are in debt, the ones in debt are most likely men. This could be because society depends on men to be the providers.
People opt for loans either to save themselves from difficult financial situations or to seize an opportunity. The latter kind of debt might be to leverage the creditor’s capital and potentially increase profitability. Most debts have one thing in common, accrued interest, which means the debitors end up paying more for the money borrowed unless the loaner is a loved one or a non-profit creditor. This actually explains why Nigerians are more financially indebted to their loved ones than any other type of creditor. See the stats below.
43% of Nigerians Are Indebted to their Family Members or Friends
More than 4 in 10 Nigerians obtain loans from their loved ones, which is good ‘debt wise’. Financial experts recommend borrowing from loved ones because it is easier than trying to get bank loans that come with a lot of paperwork and rigid terms of payment.
Loan apps accounted for the second most relied-upon access to loans, as 26% of Nigerians affirmed that they owe some of these apps.
Due to the terrible experiences of Nigerians with some of the loan apps, a Senior Fintech Analyst at Stears, Nchedolisa Akuma suggests that borrowers show a bit more proactiveness.
A proactive step she suggested is screening the loan apps for red flags such as misinformation and a track record of defamation of their defaulters.
In a situation where defamation has happened, she suggests that defamed borrowers inform the Federal Competition and Consumer Protection Commission (FCCPC) for help.
21% of Nigerians Owing ₦50,000 or Less Represents the Highest Debt Category
From Akuma’s commentary on this savings report by Piggyvest, the reason for this low-scale borrowing includes the unemployment rate, low-income levels, rising inflation and the Nigerian economy as a whole.
Akuma went further to suggest that debtors adopt strategies like renegotiating payment terms and increasing their income to get out of debt.