Nigerians Lament Debt Trap As Borrowing For Food, Rent Soars

BY OUR CORRESPONDENTS

Nigerians are crying out as loans taken to put food on the table, pay rent and keep children in school have been turned into a debt trap. Traders say their businesses are folding, civil servants watch deductions swallow their pay, and some are borrowing from one lender just to pay another, with no end in sight.

For many Nigerians, personal loans have become less of a choice than a last resort. As the cost of food, transport, rent, school fees, medical care and other essentials continues to rise, more households are borrowing simply to get through the month.

Though the loans provided temporary relief, borrowers across the country say the high interest rates, short repayment periods, and aggressive recovery methods by lenders are putting them under intense pressure.

Recall that the Central Bank of Nigeria (CBN), in its Economic Report for May 2026, noted that personal loans obtained by Nigerians rose to an estimated N2.06 trillion, accounting for nearly two-thirds of outstanding consumer credit.

The growing dependence on personal loans comes at a time when consumer spending remains weak, and household incomes are under pressure.

The increase came against a challenging operating environment for households and businesses. The CBN reported that economic activity remained weak in May, with its composite Purchasing Managers’ Index at 49.60 points, slightly higher than 49.40 points in April but still below the 50-point threshold separating expansion from contraction.

According to the bank, the contraction reflected subdued demand, declining new orders and elevated production costs. It also identified weak consumer spending and higher energy-related costs as pressures on the industry and services sectors.

Borrowing for household assets also declined from 25.2 per cent to 23.4 per cent. The report warned, “Coping/consumption purposes rose from 31.7 per cent to 40.8 per cent; productive purpose fell from 40.2 per cent to 34.3 per cent. We need to ensure that credit builds productive capacity and does not produce distress.”

Formal credit use increased from six per cent of adults in 2023 to 10 per cent in 2026, with about 11.9 million Nigerians borrowing from regulated providers. When informal sources were included, 36 per cent of adults had access to some form of credit.

Credit use among informally employed Nigerians tripled from five per cent to 15 per cent, while borrowing among people aged 18 to 35 rose from four per cent to 10 per cent. Business owners recorded an increase from four per cent to 10 per cent, while farmers rose from two per cent to six per cent.

However, the report found significant distress among borrowers. About 45.8 per cent of formal-credit users reported some or serious repayment stress, while 83.8 per cent experienced ongoing financial stress.

Borrowing for personal needs

For many Nigerians, loans have become a way of meeting urgent personal and family obligations rather than financing businesses.

Speaking with LEADERSHIP, a civil servant in Yenagoa, Blessing Ebiye, said she borrowed N300,000 from a fintech lending platform to pay her house rent and settle urgent household needs. She was required to repay about N45,000 monthly for eight months, bringing the total repayment to approximately N360,000.

Although the money helped her address the immediate pressure, repayment became more difficult after she took another small loan to meet other expenses.

Ebiye said the deductions sometimes left her with little money from her salary, although she would consider borrowing again if faced with an unavoidable financial need.

Ahmed Ishola, a young Nigerian, also borrowed N50,000 from a fintech loan application to cover transport costs, emergency needs and other daily expenses before receiving his salary.

However, he was required to pay an additional N20,000 in interest and other charges within a month, bringing his total repayment obligation to N70,000.

“I had difficulty repaying the loan because of the short repayment timeframe. Things may not always go as planned financially, and an individual may experience delays in receiving the money needed to repay the loan on time,” he said.

The experience has made Ishola reluctant to seek another loan from a fintech lending platform, which he described as expensive and difficult to repay within the stipulated period.

For Peter Ugbeche, a civil servant, the need was also immediate. He borrowed N100,000 from a cooperative society to meet household expenses rather than finance an income-generating activity.

He lamented the 10 per cent interest rate, equivalent to N10,000 per month, and said he had been unable to repay the loan for two months. The situation became so distressing that he considered switching off his phone permanently to avoid contact with the lender.

Rose Timile, a fruit trader, borrowed N50,000 from a microfinance bank to pay rent, settle medical bills and cover school fees.

Although she saved money with the bank, she said this did not provide enough financial cushioning to guarantee repayment. After she defaulted on the previous month’s loan and interest payment of N5,000, the bank arrested her surety, she said.

Aisha Umar borrowed N200,000 from First Bank to support her daughter’s marriage after the death of her husband left her without anyone to assist with the expense.

She repaid the money through monthly contributions, but said she was not aware of the interest rate attached to the facility.

Grace Yanta also borrowed N700,000 from a family cooperative society to pay her children’s school fees. The money attracts interest of five per cent monthly, and she said repayment had placed considerable pressure on her finances.

Yanta depends on selling akara to raise the money needed to service the loan.

Idriss Shuaibu, an undergraduate law student at North Eastern University, Gombe, said he received more than N500,000 under a loan scheme during the administration of former President Muhammadu Buhari.

He said he believed the money was a palliative intended to cushion the effect of the economic hardship during the COVID-19 period. He used part of it to buy essential household items and paid school fees with the balance.

About two years later, however, deductions began from his bank accounts. He said the deductions were irregular and that he did not know how much would be taken or when they would stop.

“At one point, almost N100,000 was deducted from my GTBank account at once,” he said.

Shuaibu, who is married and has two children, said he stopped depositing money into his main bank accounts and began using an OPay account, where he could withdraw no more than N300,000.

“I am really in a dilemma. I am an undergraduate and I am also a family man. I cannot afford to keep losing money from my account without knowing what is coming next,” he said.

He said the amount already deducted was, in his estimation, more than the money he initially received.

“Honestly, it is not easy. I would not take such a loan again. We thought the money was a palliative that would help empower us, but for me, it has become counterproductive,” he said.

Bright Edafe, a bricklayer, also borrowed money for a family need. His uncle paid N250,000 for his children’s school fees, after which Edafe agreed to provide building blocks worth the same amount to offset the debt.

Although the obligation was linked to his work, the money was originally intended to pay school fees. Edafe said the arrangement affected his income because the value of the work exceeded the amount used to settle the debt.

“On a good day, the job is supposed to be at least N350,000, but because of the way the money came, I have to bear the loss,” he said.

He added, “If not for the condition, it is not the best for anyone. The interest is killing. We are talking of interest for now, not even the main money. Where do I start from?”

Other borrowers, including Lawal Inuwa, Alhaji Musa Megemu and Ado Peter, also described difficult experiences with digital lenders, although they did not state clearly how they used the money.

Inuwa, a civil servant, said he borrowed from multiple digital lenders after his bank refused to grant him a salary-tied loan. He described the lenders as loan sharks that “milk customers dry”.

Megemu said he borrowed N200,000 after responding to a random text message offering quick loans. He eventually repaid N310,000 within one year.

“The Nigerian condition forced us to apply,” he said.

Peter said he obtained N150,000 after clicking a loan link but alleged that the lender continued to deduct money from his account even after he had fully repaid the facility.

“I have paid more than N400,000 for a N150,000 loan. When I complained, the agent said he didn’t know anything about it. It’s so painful,” he said.

Dalyop Gyang said he borrowed whenever he needed money for his children’s school fees or to address health challenges. He said deductions were made from his salary at the end of each month.

He described borrowing from cooperative societies as a last resort but said he would continue to seek loans in emergencies, such as medical bills and school fees.

Borrowing to keep businesses running

Other Nigerians, however, turned to loans to start, maintain or expand their businesses. But even where the money was used for productive activities, weak demand, rising operating costs and unexpected events made repayment difficult.

Paulinus Ejiofor, a trader from Abia State, borrowed N200,000 from a cooperative society for his business.

He is repaying about N6,000 per week, or roughly N24,000 per month, with the cooperative’s charges included in the arrangement.

Ejiofor said rising prices and low patronage had affected his business, but he remained hopeful that increased activity during the Christmas season would improve his income and help him meet his obligations.

He said he would consider taking another loan if the need arose but would prefer to avoid borrowing for food, rent and other recurring expenses that did not generate income.

In Lagos, Joan Iheonu, who operates a foodstuffs shop in Ogba, said borrowing had become necessary to keep her business stocked.

“I have to take out a loan to restock my inventory. The most recent loan I borrowed was N300,000 from FairMoney, which I used to purchase goods for my shop,” she said.

The loan requires her to repay N30,500 monthly for 10 months.

Although she acknowledged that the facility was necessary to sustain her business, Iheonu said the cost of servicing it was high.

“The interest is too much, but I had no choice,” she said.

She preferred borrowing through cooperative societies, which she said offered a more manageable repayment experience than fintech loan applications.

“Using cooperatives is much better. Loan apps often bring embarrassment if you default on your payments,” she said.

In Lafia, Nasarawa State, Bridgette Danjuma, a clothing dealer at Central Market, borrowed N1m from a cooperative society to expand her business.

She paid N117,000 upfront and is required to repay N74,000 weekly, whether or not she makes sales.

“By the time you finish paying at the end of 16 weeks, you must have paid N256,000 as interest without commensurate profit,” she said.

Emmanuel Chijoke, who sells babywear in the same market, said high interest rates were crippling traders’ businesses and causing depression among those unable to break even.

“You see many businesses folding up because of the high interest rates, and traders slumping and dying from unknown ailments which may be connected to loans,” he said.

In Katsina, Sarah Jacob, a provision seller, borrowed N500,000 from LAPO Microfinance Bank to support her business.

The loan attracted an interest rate of 20 per cent. She said repayment was initially manageable, but became difficult whenever she could not meet her obligation in a particular month.

Additional charges imposed for missed payments increased the pressure and forced her to borrow from other sources to settle the debt.

“Whenever I failed to pay in a particular month, there were extra charges. I sometimes had to borrow money from somewhere else to pay them off so that I could redeem myself from the challenge,” she said.

Amina Sani, another petty trader, obtained N70,000 through a local Adashe contribution scheme to support her business.

Unlike Jacob, she did not report major difficulties in repaying the money, saying the smaller amount and community-based arrangement made the loan manageable.

In Akwa Ibom State, Affiong Bassey borrowed N800,000 from the Nka Iban Cooperative to support her seafood business.

She said she normally contributed N50,000 weekly and expected to receive N500,000 at the end of every month.

However, flooding forced fishermen to go farther into the sea, reducing the supply of seafood and affecting her business.

“The lull in the business, therefore, created a crisis situation and low margins of gain, putting pressure on me to meet the loan repayment schedule,” she said.

Uwem Essien, a former banker, borrowed N1.5m from a commercial bank at an interest rate of 20 per cent. He used the money to bury his late father, but later lost his job during a workforce reduction.

Because repayment was linked to his salary account, he could no longer meet the obligations after his salary stopped.

In Ilorin, Kwara State, John Feranmi borrowed N300,000 from a cooperative society to support his poultry business.

The loan attracted a monthly interest rate of 10 per cent. However, heavy rainfall flooded his poultry house, killing all the birds and leaving him unable to repay the loan as planned.

“Since then, I have been struggling to repay the loan. The idea of borrowing again is currently not in my agenda as I am still trying to settle the pending loan,” he said.

Iffi Precious said she borrowed about N1m from banks, loan applications and microfinance institutions to support her salary.

Although she did not specify a particular business, she said the interest rates ranged from 50 to 70 per cent or more and that she had accumulated several outstanding obligations.

“Yes, I have a lot of outstanding loans, and the institutions that lent me money keep adding late-payment fees, which makes it extremely difficult to pay,” she said.

In Ogun State, 52-year-old Tayo Akanbi borrowed N100,000 from a microfinance bank to support her roadside roasted-plantain and fruit business.

She was expected to repay N120,000 over 24 weeks, at a weekly payment of ₦5,500.

Akanbi described the six-month repayment period as a “gb’ómú lé lántà” period — a Yoruba expression describing intense hardship — saying she could neither eat breakfast nor lunch until she had made enough money from her daily sales.

“It was because there was no alternative source of financing for my business and so, I had to borrow the money. Every day, the canvassers and coordinator would be on your neck towards ensuring that you prioritise savings for the loan,” she said.

Sheriff Ojekunle, who sells soft drinks and bottled water at Olomoore Junction in Abeokuta, borrowed N150,000 and was required to repay N174,000 within 60 days.

She said she faced intense pressure before raising the money required for daily repayment.

“I saw hell before I could finish repayment of the money because of the pressure from our coordinator and representatives of the microfinance bank that gave us the money,” she said.

“Most times, I would not eat, particularly on days when the weather was cold and people wouldn’t buy drinks.”

Babatunde Risikat, another soft-drink seller, said she would still consider taking another loan because she had no alternative.

“If only the governments would make alternative provisions available, I for one will appreciate it because such may eliminate the burden of overpayment of an additional N20,000 we are paying on N100,000 in just 30 days,” she said.

She also called for the removal of the daily N200 ticketing charge, which she said reduced traders’ already limited profits.

In Oyo State, a frozen-food seller identified only as Bimpe said she had borrowed from an online lender for three years, increasing her facility from N150,000 to N250,000 to support her business.

She said the weekly repayment arrangement and interest rates of between 15 and 20 per cent made repayment difficult.

On several occasions, she alleged, officials threatened to seize some of her valuables or detain her in their office.

An Okada rider identified as Kabiru said he borrowed N400,000 from an online financial institution. Although repayment was monthly, he said officials started calling before the deadline and threatened to contact or arrest his guarantors.

Obi Patricia Chiemenem borrowed N500,000 from Grooming Microfinance Bank to operate a restaurant and beer parlour business.

The loan was repayable over six months, with a weekly instalment of N27,000. The amount included N2,000 in personal savings, making the actual weekly loan repayment N25,000.

Chiemenem said the loan attracted 10 per cent interest at the end of the six-month period, although she did not know the exact effective interest rate.

She said repayment was manageable because the weekly instalment structure made it easier for her to plan. The compulsory savings component also helped her build a reserve.

Chinyere Obioma, a point-of-sale operator, borrowed N300,000 from ASHIA Microfinance Bank for her POS business.

She repaid the loan over six months through a monthly instalment of N58,400, which included N2,000 in personal savings.

Although she did not know the exact interest rate, Obioma said she preferred the monthly repayment model.

“I will continue to take the loan,” she said.

James Basu, a farmer, borrowed N500,000 from Jimeta Microfinance Bank for the farming season.

The loan carried an interest rate of 25 per cent, which varied with the prevailing inflation rate. Basu, however, said low rainfall and flooding had affected his expectation of a bumper harvest, making repayment more difficult.

Charity Danjuma, who operates a business centre in Bukuru Low Cost, Jos South Local Government Area, said she gave loans to interested persons at an interest rate of 10 per cent, depending on the amount borrowed.

Dalyop Gyang said he borrowed from moneylenders whenever he needed money for school fees or health challenges, with deductions made from his salary at the end of each month.

For borrowers who used the money in their businesses, the expectation was that sales or production would generate enough income to cover repayment. But flooding, poor patronage, high operating costs and weak consumer demand often undermined that expectation.

Experts call for cheaper credit

An accountant at the Federal Medical Centre, Yenagoa, Peremobowei Disi, who previously ran a thrift lending business, said the pressure is becoming more visible.

He said he charged 10 per cent, while other lenders charge 30 to 40 per cent. He said some borrowers take out several loans from different lenders and use one loan to repay another, creating a cycle of debt.

He cited a worker who received about N240,000 but has about N23,000 deducted monthly over a long period. “People need money, and because the monthly repayment looks manageable, they may not consider how much they will eventually pay over the entire repayment period,” he said.

Disi called for stronger government-owned microfinance institutions and office cooperatives that offer affordable, flexible credit. He also recommended emergency loan schemes and measures to reduce the cost of essential goods.

Mallam Shehu Ibrahim, an ICT expert and former Director-General of the Nasarawa Bureau for Information and Communications Technology, urged NITDA and security agencies to clamp down on unregistered loan apps. Prof. Ugbwoke Walter of the Federal University of Lafia said the solution is financial inclusion.

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