As Inflation Rises, Nigerians Resort to Loan Applications 
Home News As Inflation Rises, Nigerians Resort to Loan Applications 
News - October 25, 2023

As Inflation Rises, Nigerians Resort to Loan Applications 

Amidst the mounting challenge of skyrocketing food prices, a recent study conducted by SBM Intelligence has revealed that an increasing number of Nigerians, spanning various income groups, are seeking financial relief through loan applications.

The study found that 27 per cent of Nigerians have resorted to loan apps to help make ends meet in the face of record-breaking inflation.

Amina Abubakar, a Lagos resident and mother of three, shared her poignant experience, stating, “With food prices rising at an alarming rate, my family has been struggling to keep up. We had no alternative but to turn to these loan apps to ensure we could put food on the table. It’s far from an ideal situation, but it’s currently our only recourse.”

She added, “Just last year, I could purchase a loaf of bread and a derica of rice for a little over N1,000. Now, a derica of rice alone costs N1,000. We have had to rely more on beans because it’s more affordable, but we even have to cook it on a charcoal stove to conserve gas.”

The surge in the demand for loans

Salami Ogunyinka, who operates a lending company in Ibadan, Oyo State hinted that the demand for loans has been on a steady increase. 

He said, “Every time there is a remarkable increase in the dollar rate, there seems to be an increase in demand because there is no denying that it has a direct impact on the prices of goods.”

Speaking further, Ogunyinka revealed, “We have made some recent adjustments, for example, reducing loan requests from N200,000 to N100,000.” 

He mentioned that the company recently declined a loan request of N1 million due to the associated risks. However, they did approve a N300,000 request on Monday, albeit with stringent new rules in place.

Despite these measures, Ogunyinka said, “The rate of default has also increased slightly.

Loan apps engage in minimal lending activities

In an interview with Newsmen, Adedeji Olowe, CEO of Lendsqr, a startup specializing in assisting credit companies in recovering loans and preventing defaults, noted that fintechs are engaging in minimal lending activities due to the perceived high risk of borrowers using the funds for consumption, which raises the spectre of substantial defaults.

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