An average of one in three households in Nigeria have had to take loans to shore up their financial strength since the onset of the COVID-19 pandemic, Nigeria’s statistics bureau, NBS, has said.
The bureau also said one in four households were already indebted prior to the COVID-19 crisis.
This is contained in the monthly COVID-19 National Longitudinal Phone Survey by the NBS in collaboration with the World Bank to monitor the socio-economic impact of the pandemic and other stocks among Nigerian households.
The survey, published on Sunday, was conducted between August 9 and 24, a timespan that coincides with the period when Nigeria’s nationwide shutdown was eased and state-wide daily activities commenced.
Findings of the survey also showed that both richer and poorer households had recourse to take loans but “the latter was more likely to have loans taken before the start of the pandemic than the former and 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,” the report read.
By implication, this shows that COVID-19 has impacted on the finances and livelihoods of households across the whole income distribution, and not only the most vulnerable.
“Loans taken since mid-March have been predominantly informal in nature, with over 55 per cent being obtained from friends or relatives,” the NBS noted.
“The loans obtained from formal sources were far less frequent, with only 9 percent of respondents reporting loans obtained from banks and microfinance institutions and 16 per cent from cooperative and savings associations,” the bureau added.
It said this could reflect barriers faced by the 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.
Further details of the survey revealed that new loans were primarily used to pay for food items, farm and non-farm business tools. Other purposes of loans were capital for business enterprises, purchase of foodstuffs, health and education expenses.
“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 onset 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,” the report read.
“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.”
The NBS further said 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.
On the point of employment and livelihoods, NBS said, “only 34 per cent of respondents have been working continuously since April/May, while 60 per cent have experienced periods without work and 6 per cent have not worked at all since the start of the pandemic.”
Meanwhile, food insecurity in Nigeria remains precarious, even as the COVID-19 restrictions continue to be eased.
According to the survey, the share of households experiencing moderate or severe food insecurity remained high, at 68 per cent in August 2020.
Unarguably, this corroborates earlier findings that there continues to be instability in the job market and food security situation in the country.
Similarly, another report showed that an average of seven in every ten households residing in Abuja and Rivers experienced food insecurity in Q2 2020.
This downswing is largely attributable to lower levels of both domestic and international economic activity during the quarter, which resulted from nationwide shutdown efforts aimed at containing the COVID-19 pandemic.
Support PREMIUM TIMES' journalism of integrity and credibility
Good journalism costs a lot of money. Yet only good journalism can ensure the possibility of a good society, an accountable democracy, and a transparent government.
For continued free access to the best investigative journalism in the country we ask you to consider making a modest support to this noble endeavour.
By contributing to PREMIUM TIMES, you are helping to sustain a journalism of relevance and ensuring it remains free and available to all.
TEXT AD: Call Willie - +2348098788999