The Central Bank of Nigeria (CBN) has revealed that microfinance banks (MFBs) accounted for 95.66 percent of bank debtors in 2024, emphasising their vital role in providing credit to individuals and small businesses.
As of September 2024, 6,253 out of the 6,537 total debtors were linked to MFBs, highlighting their dominant presence in Nigeria’s lending ecosystem.
Despite their importance, the number of MFB debtors has been on the decline. Month-on-month, the figure dropped from 6,573 in August 2024 to 6,253 in September 2024. On a year-on-year basis, the decrease was even more pronounced, falling by 26.4 percent from 8,500 in September 2023. The drop has been largely attributed to elevated interest rates, a result of policy changes under CBN Governor, Mr. Olayemi Cardoso.
Since February 2024, the monetary policy rate has increased six times, rising from 18.75 percent to 27.50 percent by November 2024. These rate hikes, aimed at controlling inflation—which reached 34.80 percent in December 2024—have led to higher borrowing costs, discouraging individuals and businesses from taking loans.
While MFBs continue to dominate as creditors, deposit money banks have experienced a steep decline in debtor numbers. Borrowers from deposit money banks dropped significantly from 498 in September 2023 to just 155 in September 2024, marking a 68.9 percent year-on-year decrease. Other financial institutions exhibited mixed trends, with finance houses showing notable growth in borrower numbers, while non-bank financial institutions recorded modest increases.
Individuals remain the largest group of borrowers, comprising 5,692 out of the total 6,537 debtors in September 2024. Small businesses have also demonstrated resilience, with the value of secured loans increasing by 68 percent year-on-year, rising from ₦3.08 billion in September 2023 to ₦5.18 billion in September 2024.
The rise of digital loan platforms has further shaped borrowing patterns, offering quick, collateral-free credit. However, these platforms have sparked concerns over their high interest rates and aggressive recovery tactics. Despite the overall decline in debtor numbers, the total value of loans across all categories increased by 4.2 percent year-on-year to ₦118.73 billion in September 2024.
