The Federal Government intends to spend N350bn on a consumer credit fund and national poverty reduction strategy in 2024.
This is according to details from the recently passed N28.77tn 2024 Budget. In a document titled, ‘House of Representatives Federal Republic of Nigeria Order Paper,’ certain line items of the budget were published.
One line item (which appeared under ‘capital supplementation’ and ‘other service–wide votes’) ‘National Poverty Reduction with Growth Strategy (FGN Commitment, including NSIP Upscaling)’ got a total of N250bn while another item Consumer Credit Fund got N100bn.
The setting up of a consumer credit fund is coming weeks after the Presidential Council on Industrial Revitalisation announced it was establishing a Technical Working Group to develop a framework to enhance consumer credit in the country.
The committee consists of members from the CBN, the National Identity Management Commission, and the Federal Competition and Consumer Commission.
The Minister of Industry, Trade and Investment, Dr Doris Uzoka-Ani, said, “An efficient consumer credit system is a highly essential component of successful economies, as it works to improve market efficiencies and fill in gaps in consumption and productivity by providing consumers immediate access to credit, allowing them to purchase ahead of ability.
“The absence of a well-structured consumer credit system has been a significant impediment to financial inclusion and economic prosperity.”
She noted that while the country has numerous financial institutions and credit schemes, many Nigerians still face substantial hurdles in accessing credit due to stringent eligibility criteria, high-interest rates, identity-related challenges, fragmented data sources for proof of livelihood and financial worth, lack of awareness or understanding of credit processes, and inadequate credit available for lending.
According to the Central Bank of Nigeria, there has been substantial growth in consumer credit in the country. In the third quarter of 2023, total consumer credit was N3.05tn (it was N2.31tn as of the end of the fourth quarter of 2024). Personal loans accounted for 74.8 per cent and retail loans covered the remaining 25.2 per cent.
The National Poverty Reduction with Growth Strategy was approved by the Federal Executive Council in 2021 when Muhammadu Buhari was president to address poverty, particularly in rural areas.
In a document dated March 2021, the Presidential Economic Advisory Council noted that over 80 million Nigerians were poor with more than 50 per cent of them being multi-dimensionally poor (as of November 2022, the National Bureau of Statistics disclosed that 133 million Nigerians were multi-dimensionally poor).
The council highlighted how over the 10-year programme period (2021-2031) of the programme, a total cost of $1.6tn ($161bn annually) would be spent on lifting 100 million Nigerians.
Before leaving office, the Buhari administration claimed that a total of 1.8 million vulnerable Nigerians benefited from the programme.
Recently, the Minister of Humanitarian Affairs and Poverty Alleviation, Betta Edu, stated that the eradication of poverty in the country would reduce insecurity in the country by over 50 per cent.
According to President Bola Tinubu, he is “committed to supporting a strong and ideologically determined democracy that is progressive, inclusive, and focused on eliminating poverty while providing quality education for our children.”
However, the World Bank recently announced that the number of Nigerians living below the international poverty line will hit 38.8 per cent in 2024. It noted that this would be due to slow growth and rising inflation in the country.
Commenting on how the government can address poverty in the short term, the bank noted, “Targeted measures, including cash transfers, could mitigate short-term adjustment costs to the poor and vulnerable and mitigate their risk of falling into intergenerational poverty traps.”