The National Bureau of Statistics (NBS) in its latest report has disclosed that many Nigerians household borrowed new loans to meet their obligations during the COVID-19 lockdown.
The report by NBS stated that the pandemic continued to affect the livelihoods of Nigerian households and many have had to take out loans to meet their current obligations.
According to the report, about one in four households were already indebted prior to the pandemic while nearly one third have taken out new loans since the onset of the pandemic.
The report stated: “Poorer households were more likely than richer households to have loans taken before the start of the pandemic that they were still repaying.
“However, the opposite occurs with new loans, with households in the higher quintiles being more likely to have taken new loans than poorer households.
“This shows that the pandemic has impacted the finances (and livelihoods) of households across the whole income distribution, and not only the most vulnerable.”
The report by NBS disclosed that loans taken since mid-march have been predominately informal in nature, with over 55per cent being obtained from friends or relatives.
According to the report, “Loans obtained from more formal sources were far less frequent with only 9% of respondents reporting loans obtained from banks and microfinance institutions and 16% from cooperative and savings associations.
“This could reflect barriers faced by Nigerian households to obtain formal loans in the face of a crisis and that many households instead must turn to friends and relatives for loans. just as with loans taken before the pandemic, new loans were primarily used to pay for food items and, farm and non-farm business inputs.
“However, there are also some important differences in the purposes for which loans were taken before and after the start of the pandemic.
“About 51 per cent of households that obtained loans after the pandemic began used these loans for purchasing food, compared with 41 per cent of households with existing loans, indicating that loans taken since the start of the pandemic were used more to sustain households’ basic needs.
“There was no difference in the share of loans taken to pay for health expenses comparing loans taken before and after the pandemic, but the share of loans being used for education expenses was substantially reduced, either due to the timing of the survey (at the end of the school year) or due to most schools being closed as part of the mitigation efforts by the government.
“A substantial share of households with both new and existing loans are concerned about repayment, with more than 70 per cent of households reporting that they are either very worried or somewhat worried about being able to repay their loans.”
Report full report below: Nigeria_COVID-19_NLPS2020_Round4_Brief