Debt: More Nigerians resort to borrowing to survive amidst economic hardship

As economic hardship bites harder, Nigerians have devised a risky method of staying afloat amidst the difficulties by resorting to credit, some with exorbitant interest rates. Nothing corroborates this new phenomenon more than the recently released World Bank report, 

Global Findex 2025, which shows that almost 60% of adults in low- and middle-income economies, including Nigeria, borrowed money in 2024, either through formal, semi-formal, or informal channels to take care of their needs.

The findings outline the growing trend of credit access, highlighting persistent differences in financial inclusion across regions.

The survey, which looked at 139 economies, asked respondents whether they borrowed money in the past year and identified the sources of those funds.

The report notes that though borrowing was widespread, only 24% of adults—or 40% of borrowers—accessed formal credit, such as loans from banks, credit unions, mobile money providers, or credit cards.

“Credit is a vital tool for financial resilience and opportunity, but access remains uneven,” the report notes.

Perpetual Debtors

Also, many borrowers, who are just desperate to have some money for immediate needs, lack the repayment capacity to meet the stringent conditions of the loan apps, forcing them into further debts. Some borrow from one loan app to repay another loan, leaving them in a vicious cycle of perpetual debt.

The report in looking at the borrowing channels says formal borrowing is rampant with 24% of adults borrowing through banks, credit cards, or mobile money accounts

According to the report, about five percent are involved in semi-formal borrowing from channels as savings clubs or rotating credit associations, while informal borrowing  involved 31% of the people, who borrowed from family or friends, with 21% relying solely on this method

Those that explored other sources of credit are about 12%  tapping into options like buy-now-pay-later services or grocery credit.

The report found that informal borrowing was more prevalent in regions, such as Sub-Saharan Africa, South Asia, and the Middle East and North Africa, where over 45% of adults borrowed informally only. In contrast, just 19% of adults in East Asia and the Pacific relied solely on informal credit.

The report highlights significant gaps in borrowing behaviour. Women were more likely than men to borrow informally only in all regions except East Asia and the Pacific.

Armed with this data, Business Hallmark went to town to gauge the opinions of Nigerians, to test the prevalence of borrowing to survive the hard times, and the outcome of our survey speaks to the growing hardships in the land, especially in the last two years of President Bola Tinubu’s administration.

A Growing Culture

Akin, who declined to mention his surname, a motor mechanic by trade, told Business Hallmark that it’s sure, “I will not vote for All Progressives Congress (APC) in 2027 if God spares my life to participate in the electoral process. This party has brought nothing but sorrow. I have lost my creditworthiness, and my rating has dropped. As I speak to you, I owe many online lenders. I have been insulted, called out, and many of them have contacted my contacts, including my customers, saying I’m a criminal on the run. This money I borrowed was just to feed my family.

His view tallies with Oyinda , a 32-year-old petty trader at Dalemo market near Alakuko.

“My brother, I started with just N2000, I paid back, and I decided to try further. I was given approximately N10,000 by the same lender, and I was expected to pay with exorbitant interest, meaning that within the seven days they gave me to pay, I was to cough out N15,000.  I used this money to feed my children because my husband’s business was not moving. I sell small items in the market, such as egusi, Okro, and peppers. I had to borrow from another lender to pay back. That was how I entered a cycle of debts. Out of fear of constant harassment, I changed my number. They have been sending messages to my contacts that I’m a HIV patient.”

Biola, who works in a private company in Lagos, has a similar story to tell, though he has not been harassed; but his present life revolves around a debt cycle.

“The reality,” he said, “is that in today’s Nigeria, you must be extremely well paid in your workplace not to be involved in borrowing before your payday. As for me, I take advantage of small credit from my banks to meet family needs and other unexpected situations that may arise. Once I collect my salary, about 75 percent will have been deducted by my bank. That way, I barely manage to keep body and soul together. I can remember when I last bought new clothes or shoes; that kind of thing has become a luxury. We can’t continue like this. Mind you, nearly all my friends are involved in this cycle of debts.

At Agbado market, of the 25 women spoken to by Business Hallmark, 20 admitted to borrowing to survive and to augment their wares. Of the 20, 10 admitted to accessing loans from the market association, while five went through the microfinance option (called Lapo with stringent conditions), and the remaining five borrowed money from family members.

Boom in Esusu or Ajo

Many people have also joined a contribution, whether daily, weekly, or monthly, which guarantees them some lump sum payment on the due date, but at a very personal self-denial and sacrifice in meeting current needs. Mrs. Josephine Adeji, who is a petty trader and husband, a Keke driver, contributes N20000 every week to be able to pay their four children’s school fees and house rent.

“Sometimes we go hungry to bed just to meet up. It is not easy at all; life has been very difficult in the past two years. We are borrowing everywhere we can find to make we meet up; we are still owing the school fees for the third term, hoping that before September, we will get money,” she lamented.

Dr. Abiola Mokikan, a psychologist, told Business Hallmark that “borrowing money to survive has many implications. One, it tends to lower self-worth, confidence, and create a psychological feeling of failure on the person borrowing. It makes them lose faith in society, which they blame for creating a condition in which they are unable to cater to the needs of their families. Let me tell you, there’s a link between your body mechanism and your psychological state. If you live on borrowing persistently, you may likely develop hypertension arising from fears of not being able to pay back.

Mokikan’s perspective reflects the thinking of many, who expressed feelings of constant fear over paying back difficulties.

Professor Adeyanju Awomola, a sociologist, told Business Hallmark that  “the increasing reliance on loans to survive is the greatest indictment of the current administration, and a telling evidence of the failure of their economic policies. How can a large segment of your population rely on loans to survive? If the social safety nets are there, will the people rely on loans to survive? We are not talking of taking loans to do business, but to buy food.

“How will they pay back in this excruciating period of hardship and inflation?  Honestly, go and mark my words, if the so-called policies are not reversed, the poverty rate will affect about 180 million Nigerians before the end of this current administration.

Nigeria’s Poverty Context

Nigeria has a high poverty rate, particularly in rural areas, where it reached 75.5% in May 2025,  while the country also has the second-largest number of poor people globally.

This widespread borrowing is a consequence of economic challenges arising from the removal of subsidies without any social safety nets, growing inflation, corruption, and the misappropriation of loans taken from international financial institutions, such as the World Bank.

Despite the economic difficulties, the World Bank continues to provide financial support to Nigeria through loans for developmental projects and programs aimed at improving education, nutrition, and community resilience. For instance, the World Bank approved $1.08 billion in concessional financing in April 2025 to support these sectors.

But analysts have continued to query how the money was utilized given that there’s no transparency, collapse infrastructure, and growing poverty.