Under the recently approved ₦28.77tn 2024 Budget, the Federal Government plans to allocate ₦350bn towards the establishment of a consumer credit fund and the implementation of a national Poverty reduction strategy. Details regarding these fiscal allocations were disclosed in a document titled ‘House of Representatives Federal Republic of Nigeria Order Paper’. In the financial breakdown, there were two noteworthy items. One of the items, placed under ‘capital supplementation’ and ‘other service–wide votes’, was tagged as ‘National Poverty Reduction with Growth Strategy (FGN Commitment, including NSIP Upscaling)’ and it received a total of ₦250bn. The other item, called the Consumer Credit Fund, was allocated ₦100bn.
This consumer credit fund initiative comes on the heels of the declaration of the Presidential Council on Industrial Revitalisation on forming a Technical Working Group aimed at constructing a structure to bolster consumer credit within the nation. Key constituents of this committee include members of the CBN, the National Identity Management Commission, and the Federal Competition and Consumer Commission. Dr. Doris Uzoka-Anite, the Minister of Industry, Trade, and Investment, emphasized the pivotal role of an effective consumer credit system in fostering thriving economies.
Lack of organized consumer credit system has posed obstacles.
Dr. Uzoka-Anite said the reason behind this lies in its function of enhancing market efficiencies and bridging the consumption and Productivity gaps. By granting consumers instant access to credit, it enables them to acquire goods or services beyond their current financial capacity. Meanwhile, the lack of a properly organized consumer credit system has posed a substantial obstacle to both financial inclusivity and economic progress. She observed that despite the abundance of financial institutions and credit plans in the country, a significant number of Nigerians encounter considerable obstacles when attempting to obtain credit, such as rigid qualification requirements, exorbitant interest rates, and difficulties related to personal identification.
Other cited obstacles include disarrayed data sources, insufficient comprehension of credit protocols, and low credit scores for borrowing. The Central Bank of Nigeria reports a notable surge in consumer credit within the nation. Specifically, during the third quarter of 2023, the overall consumer credit reached ₦3.05tn, subsequently surpassing the ₦2.31tn mark at the conclusion of the fourth quarter in 2023. 74.8 percent of the overall total is attributed to personal loans, while Retail loans accounted for the remaining 25.2 percent.
133 million Nigerians deemed as multidimensionally poor.
In 2021, during Muhammadu Buhari’s presidency, the Federal Executive Council granted approval to the National Poverty Reduction with Growth Strategy in order to tackle poverty, specifically focusing on rural areas. The Presidential Economic Advisory Council released a 2021 report, revealing that 80 million Nigerians were poor. Shockingly, more than half of this number were classified as multidimensionally poor. However, fast forward to November 2022, data from the National Bureau of Statistics shows that 133 million Nigerians are now deemed as multidimensionally poor. The council notes that to lift up 100 million Nigerians from poverty under the 10-year program (2021-2031), would cost $1.6tn annually.
Prior to departure from power, the Buhari administration affirmed that an estimated 1.8 million underprivileged Nigerians had reaped the benefits of their program. In a recent address, Betta Edu, the Minister of Humanitarian Affairs and Poverty Alleviation, emphasized that by successfully combating poverty within the nation, the rate of Insecurity would notably diminish by more than half. President Bola Tinubu also pledges unwavering dedication to bolstering a resilient and ideology-driven democratic system that aspires to advance, embrace all, eradicate destitution, and ensure superior Education for the upcoming generation.
Providing cash transfers could minimize challenges faced.
A recent report by the World Bank projected that by 2024, a significant percentage of Nigerians will find themselves below the global poverty threshold. The leading factor behind this unfortunate situation is attributed to the country’s sluggish Economic Growth and mounting inflationary pressures. Regarding the government’s approach to address poverty in the short term, the world bank notes that implementation of specific interventions like cash transfers could aid in minimizing the immediate challenges faced by the impoverished and vulnerable population. This would also help reduce the likelihood of them getting trapped in a cycle of poverty that affects multiple generations.