The Central Bank of Nigeria (CBN) has revealed that 95.66% of bank debtors as of September 2024 borrowed from microfinance banks (MFBs).
This statistic underscores the critical role that MFBs continue to play in Nigeria’s financial landscape, particularly for individuals and small businesses.
Of the 6,537 total debtors across all financial institutions, 6,253 were linked to MFBs, signaling their dominant position in the country’s lending ecosystem.
However, the data also indicates a slight decline in MFB borrowers, 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 reduction is largely attributed to rising interest rates, which have made borrowing more expensive and discouraged many potential borrowers.
The Central Bank, under the leadership of Governor Olayemi Cardoso, has implemented a series of interest rate hikes to curb inflation, which surged to 34.80% in December 2024.
This aggressive monetary tightening has pushed borrowing costs higher, leading to a general decline in debtors across various financial institutions.
Despite the decline, MFBs remain the primary lenders, accounting for nearly 96% of all debtors in September 2024.
In contrast, traditional deposit money banks saw a dramatic fall in debtor numbers, dropping by nearly 69% from 498 in September 2023 to just 155 in September 2024 .
This decline reflects the stricter credit requirements of traditional banks, further exacerbated by the higher interest rates and competition from alternative lending platforms.
Meanwhile, other creditor types displayed mixed results. Finance houses experienced significant growth, with debtors increasing by 195% year-on-year, while non-bank financial institutions saw a modest 32% increase in debtor numbers.
The rise of digital loan apps, offering quick, collateral-free loans, has also played a role in reshaping borrowing patterns.
Although these platforms are criticized for high-interest rates and aggressive recovery tactics, their growing popularity highlights the increasing competition faced by MFBs and traditional banks.
The total value of loans across all debtor types reached N118.73bn in September 2024, marking a 4.2% year-on-year increase, though it represented a 12.8% month-on-month decline.
Notably, individual borrowers accounted for N22.2bn of the total, reflecting a sharp decline from the previous month, but a significant increase from the previous year.
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