Nigeria’s payday lending industry, offering short-term, high-interest loans to cover immediate expenses, has seen significant growth, primarily driven by widespread under-banking, economic hardship, and limited access to traditional credit. By April 2025, the number of approved digital lenders had surged to 515, a near threefold increase from 173 in April 2023, showcasing the rapid expansion of digital lending platforms. The industry is fiercely competitive, with players differentiating themselves through speed, technology, reputation, and lending rates. Digital lenders emphasise quick approvals, seamless user experiences, and advanced data analytics to attract customers, while commercial banks leverage brand equity and deposit bases to offer more competitively priced products. However, pricing remains a crucial factor for borrowers, who are increasingly sensitive to interest rates due to a challenging economic environment.
Despite this growth, the sector faces considerable headwinds. As of December 31, 2024, the value of personal loans in Nigeria dropped significantly to ₦2.39 trillion, a 26.7% decrease from 2023. This contraction is attributed to macroeconomic pressures and shifts in the credit market, which have eroded consumer purchasing power and reduced households’ ability to service new debt. Persistent high inflation, averaging 33.2% in 2024, has further complicated loan repayments, contributing to a rise in default rates. The Central Bank of Nigeria’s monetary tightening, with the Monetary Policy Rate (MPR) reaching 27.5% by May 2025, has increased borrowing costs, leading to business closures, job losses, and a shrinking customer base for lenders.
In addition, the predominance of informal employment (93% as of Q2 2024) poses a challenge, as these workers often lack verifiable incomes, making them ineligible for most payday loan products. Nevertheless, accelerated digitalization by operators is expected to boost business volumes and profitability. The 2024 minimum wage increase is also likely to expand the pool of eligible borrowers, offering a glimmer of optimism for the industry’s near-term outlook.
This report provides current information on the features and performance of Payday Lending Industry in Nigeria. It includes:
The following audience has been taken into consideration in the preparation of this report:
