Millions of Nigerians are increasingly turning to personal loans to cover basic expenses as high living costs continue to strain household incomes, raising concerns about debt repayment difficulties and the growing mental health burden associated with survival borrowing.
Although Nigeria’s headline inflation rate reportedly eased to 14.63 per cent in September 2026, food, housing and transport costs remain major pressures for many households. For salary earners, informal workers and small business owners whose incomes have not kept pace with expenses, borrowing has become a way to pay rent, school fees, medical bills and other essential costs.
Key Highlights
- Personal loans accounted for nearly 65 per cent of Nigeria’s consumer credit in May 2026.
- Financial inclusion survey findings indicate that more borrowers are using credit to meet basic needs rather than finance businesses.
- Psychiatrists warn that repayment pressure and aggressive debt recovery practices can contribute to anxiety, sleep problems and depression.
- Digital lending platforms offer quick access to credit but may expose borrowers to high charges and questionable recovery practices.
- Experts say affordable credit, stronger consumer protection and improved household incomes are essential to reducing survival borrowing.
Personal Loans Dominate Nigeria’s Consumer Credit
Data attributed to the Central Bank of Nigeria (CBN) showed that personal loans stood at approximately ₦2.06 trillion in May 2026, accounting for nearly 65 per cent of total consumer credit of ₦3.18 trillion.
Consumer credit reportedly increased by ₦50 billion within the month, reflecting continued demand for borrowing.
The 2026 Access to Financial Services survey found that 40.8 per cent of formal borrowers took loans mainly to meet consumption and household needs, including rent, medical expenses and school fees. This represented an increase from 31.7 per cent in 2023.
The survey also indicated a decline in productive borrowing for business purposes, while nearly half of formal credit users reported difficulties meeting repayment obligations.
These trends suggest that some households are increasingly using loans to bridge income gaps rather than finance investments expected to generate future earnings.
Digital Lenders Offer Quick Cash Amid Financial Pressure
The expansion of digital lending platforms has made it easier for Nigerians to obtain loans without traditional collateral requirements.
For people facing urgent expenses, the speed and accessibility of these services can provide temporary relief when savings are insufficient or conventional bank credit is unavailable.
However, some digital lenders charge high interest rates and fees, while borrowers have raised concerns about aggressive debt recovery practices.
Repeated calls, threatening messages and alleged public shaming can intensify the pressure on borrowers who are already struggling financially.
Without clear information about loan costs, repayment deadlines and penalties, borrowers may also underestimate the amount they will eventually have to repay.
Psychiatrists Warn of Debt-Related Mental Health Problems
Mental health professionals have warned that persistent debt and the inability to repay loans can become significant sources of psychological distress.
In a report by Punch Healthwise, Professor Taiwo Obindo, a psychiatrist at the University of Jos and former president of the Association of Psychiatrists in Nigeria, explained that repayment difficulties can act as persistent stressors.
Debt-related anxiety may disrupt sleep, affect mood and, in some cases, contribute to more serious mental health problems. Pressure from creditors can further undermine borrowers’ sense of security and dignity.
Dr Samuel Aladejare, a consultant psychiatrist, also noted that many Nigerians turn to loans to fill financial gaps created by difficult economic conditions.
For borrowers facing repeated collection calls and messages, the stress may become so intense that they begin to dread using their phones.
The experts advised Nigerians to avoid predatory lending where possible, discuss financial difficulties with trusted family members and seek professional assistance when persistent sleep problems, anxiety or low mood develop.
They also encouraged people to assess their ability to repay before taking loans and to avoid self-medicating to cope with stress.
Why Telling Nigerians to Stop Borrowing Is Not Enough
Although financial discipline and responsible borrowing are important, the advice to avoid loans can be difficult to follow when household income cannot cover basic expenses.
For many workers, rent, food, transport, school fees and medical bills compete for the same limited income. Informal workers and small traders face similar pressures, particularly when earnings fluctuate or business costs increase.
In these circumstances, borrowing may provide immediate relief but create a larger financial burden in subsequent months.
The result can be a cycle in which rising expenses trigger borrowing, repayment obligations deepen financial hardship, and prolonged stress affects a person’s ability to work, plan and recover financially.
Nigeria’s existing mental health challenges add another layer of concern. Estimates suggest that one in four Nigerians experiences mental health challenges, while access to specialist psychiatric care remains limited.
Debt-related distress could increase pressure on an already stretched mental health system, particularly for people who cannot afford private treatment or counselling.
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Nigeria Needs Affordable Credit and Stronger Consumer Protection
Addressing survival borrowing requires more than encouraging individuals to manage their money carefully. Structural reforms are also needed to reduce the financial pressures pushing households towards repeated borrowing.
Sustained job creation, stronger real incomes and lower food, energy and transport costs would help families meet essential expenses without relying on high-interest loans.
Expanding access to affordable, regulated credit could also give households and small businesses alternatives to expensive lending products.
Stronger oversight of digital lenders is equally important. Clear disclosure of interest rates and fees, transparent repayment terms and effective action against abusive debt recovery practices would help protect consumers.
Financial education and early access to counselling can help borrowers understand loan obligations, manage repayment difficulties and seek support before financial stress becomes overwhelming.
However, these measures cannot replace broader economic improvements that enable households to cover their basic needs from their regular earnings.
Survival Borrowing Reflects Nigeria’s Wider Economic Challenge
Nigeria’s growing reliance on personal loans to meet household expenses highlights the relationship between economic hardship, access to credit and mental well-being.
While borrowing can help individuals manage temporary emergencies, repeated reliance on loans to pay for necessities can leave households trapped in debt, particularly when interest charges and repayment deadlines consume an increasing share of their income.
The warnings from psychiatrists underline the importance of addressing the psychological effects of debt alongside the financial problems that drive it.
Until household incomes improve and affordable credit becomes more accessible, many Nigerians may continue to borrow because they see few immediate alternatives.
Reducing survival borrowing will therefore require coordinated action on living costs, employment, consumer protection, responsible lending and access to mental health support.
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