Emmanuel OchayiIn response to the escalating cost of living and a surge in borrowing among Nigerians, the Federal Government has earmarked N100 billion for Consumer Credit Fund in the 2024 budget.
This move aims to counter the financial strain caused by relentless inflation and the declining purchasing power affecting citizens.
The decision was influenced by borrowing trend, with Nigerians borrowing approximately N740 billion from banks between January and September 2023. This surge highlights the economic adversity resulting from persistent inflation and diminishing financial capabilities.
The Central Bank of Nigeria’s quarterly economic reports revealed an alarming rise in consumer credit, escalating from N2.31 trillion at the close of Q4 2022 to N3.05 trillion by Q3 2023, reflecting 32% increase or N740 billion within nine months. Of this credit, 74.8% comprised personal loans, while retail loans accounted for the remaining 25.2%.
The prevailing inflation in Nigeria has had a profound impact on essential commodities such as food, fuel, and rent. Reports from the World Bank estimated that inflation forced approximately four million Nigerians into poverty during the initial five months of 2023 alone.
In an effort to tackle these challenges, the Federal Government’s introduction of the N100 billion consumer credit fund is a proactive step.
The Presidential Council on Industrial Revitalization recently formed a Technical Working Group comprising members from key institutions like the Central Bank of Nigeria (CBN), National Identity Management Commission (NIMC), and Federal Competition and Consumer Protection Commission (FCCPC) to formulate a framework aimed at bolstering consumer credit in Nigeria.
Dr. Doris Nkiruka Uzoka-Anite, Minister of Industry, Trade, and Investment, highlighted the crucial role of an efficient consumer credit system in enhancing market efficiency and bridging consumption and productivity gaps.
During the inaugural meeting of the Technical Working Group for Consumer Finance, she emphasized the urgency and necessity, stating: “An efficient consumer credit system is a highly essential component of successful economies, as it works to improve market efficiencies and fill in gaps in consumption and productivity by providing consumers immediate access to credit allowing them to purchase ahead of ability.”
She continued: “The absence of a well-structured consumer credit system has been a significant impediment to financial inclusion and economic prosperity.”
This government initiative aligns with broader efforts to stimulate economic growth and mitigate financial hardships faced by individuals across the country.
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