Nigeria’s financial inclusion is growing, but access to credit still lags

Nigeria has made strides in expanding the formal financial system, yet credit access remains a challenge. While 73% of Nigerians now have formal financial accounts, only 10% access formal credit. This discrepancy arises due to factors such as limited credit histories, irregular incomes, and higher borrowing costs that deter lenders.

EFInA reports that 87.2 million Nigerian adults are formally included, but credit access is not as widespread. The Central Bank of Nigeria recorded a decline in outstanding consumer credit from ₦4.72 trillion in 2024 to ₦3.78 trillion in 2025, a 19.92% drop. This indicates that despite the increase in financial inclusion, affordability and accessibility of credit remain issues.

Informal lending options like family and friends are popular because of their ease, but those sources often charge higher interest rates. For instance, a ₦100 loan at a simple interest rate of 27% would cost ₦27 in a year, making the total repayment ₦127 before fees. However, credit cost reduction alone won't alleviate the problem.

Inflation must also stabilize for borrowers to have adequate income for repayments. Even with reduced interest rates, lenders must account for the risk of non-repayment, further increasing lending costs. The Nigerian monetary policy rate has hovered around 27% to 27.5%, making it difficult for formal lenders to offer affordable credit.

Until inflation and interest rates decrease, borrowers will continue to struggle with high loan costs, and formal credit access will remain elusive.