How Much More Can Nigerians Take?
By Khadijah Lawan Muhammad,
There is a quiet desperation running through Nigeria’s financial system. From the high towers of Marina to the dusty stalls of Wuse Market, people can feel it. Banks are tightening their grip on loans, while families tighten their belts.
And at the heart of it all is oil—once Nigeria’s golden lifeline—now a flickering flame threatening to dim the hopes of an entire nation. When oil prices fall, Nigeria doesn’t just lose revenue. It loses rhythm.
Government payments slow, contractors wait endlessly, and banks begin to stagger. Behind every delayed deposit is a business unable to pay salaries, a youth unable to secure a loan, a woman watching her petty trade collapse under the weight of inflation and bank interests that no longer make sense.
These are not just economic statistics. They are lived realities across the country. And as if the drop in oil prices were not enough, the Central Bank’s aggressive monetary tightening has become another burden.
In its bid to tame inflation, the apex bank has pushed the monetary policy rate to a record high. But as lending dries up and credit becomes a luxury, the people most affected are not the bankers or policymakers.
They are the ordinary Nigerians—market women, small business owners, young people trying to build something for themselves—who now find credit out of reach and their dreams farther than ever.
In a country where oil accounts for over 80 percent of foreign exchange earnings and nearly half of government revenue, the consequences of a market downturn are immense.
With Brent crude currently trading well below the national budget benchmark, government cash flows are dwindling. This means fewer deposits in banks, more delayed payments to contractors, and less liquidity flowing through a banking system already under strain.
Experts warn that this cycle has triggered deeper trouble. As public sector borrowing slows, infrastructure projects stall. Confidence in vital sectors such as oil, construction, and logistics begins to shrink.
Banks, sensing the risks, pull back on lending. The result is a cruel irony: while banks try to protect themselves from default, they inadvertently cut off the very lifeline the economy needs to recover.
The situation is even more precarious for small banks. Unlike the well-capitalised giants of the sector, these institutions depend heavily on a limited clientele and are particularly exposed to oil-linked businesses.
As their non-performing loans rise and asset quality declines, their ability to support struggling businesses becomes even more limited. The Central Bank’s decision to unify exchange rates, while laudable in terms of transparency, has also unleashed unintended consequences.
The naira now trades at around ₦1,600 to the dollar, a figure that has thrown many businesses into panic. For those with dollar-denominated loans or those dependent on imported goods, the sharp depreciation has introduced unbearable costs.
Financial planning, for many, has become a gamble. While larger banks can absorb the shocks, smaller ones—those catering to ordinary Nigerians—are already showing cracks.
Their capital buffers are thin, their risks high, and their capacity to lend increasingly constrained. What this means for the average Nigerian is simple: fewer loans, stricter conditions, and a deeper struggle to access funds.
Calls are growing for more than just interest rate hikes. Financial experts are asking for regulatory reforms, targeted intervention for small businesses, and support systems that can help vulnerable Nigerians navigate these turbulent times.
Some suggest special credit schemes, others propose microfinance incentives. All agree on one thing: without deliberate action, more Nigerians will be left behind.
The administration of President Tinubu Tinubu insists that economic reform and liberalisation are the right path. And perhaps they are. But reforms must mean more than spreadsheets and stock market charts.
They must reflect in the lives of Nigerians, not just in macroeconomic projections. For now, that connection remains missing. As oil revenues dwindle and banks draw their curtains on lending, Nigeria finds itself in a financial storm.
Without urgent cushioning policies, the burden will continue to fall on the shoulders of those least able to bear it. The banks may survive. The government may weather it. But the people—the real Nigeria—are gasping for air.
Khadijah Lawan Muhammad is a Mass Communication student at Nile University and an intern with PRNigeria. She can be reached via: [email protected]