Why Nigerians don’t pay their loans

5 min readJan 13, 2021


That Nigerians don’t pay back their loans on time isn’t up for debate, after all, we all get replete with stories of the high and mighty, and the not so mighty, dragging it out with banks regarding bad loans.

“The Nigerian attitude to debt is curious and nowhere could this have been better demonstrated than in the Federal government’s failure to recover thousands of loans disbursed to farmers under the Anchor Borrowers Scheme.”Tech Cabal,

That the attitude of Nigerians to debt repayment has been a significant barrier to consumer credit in Nigeria would be an understatement. For the longest time, consumer loans were a tough nut to crack, and access to personal loans in Nigeria could be likened to a search for water in the hot sunny desert. In 2019, everything changed or so we thought.

In 2019, the Central Bank of Nigeria marshaled banks, like a bunch of errant kids, to give more loans, especially for the most underrepresented groups. Prior to this time, the average Nigerians had little or no chances of accessing consumer credit, and even when they did, chances were that such persons had walked to Hades and back.

Many thought the CBN directive was going to increase access to personal loans, which on the face of it, it did. But did it get to the everyday man like you and me? You bet!

The fear of defaults is the beginning of wisdom

While CBN was pushing for more loans for Nigerians, one of the fundamentals of why banks don’t give out loans remains unresolved: Nigerians just don’t pay back loans, and the answer to that can be quite elusive but not impossible.

Even then, why don’t Nigerians pay back their loans? Let’s dive in to find out:

Ignorance on the gravity of not paying loans

What really are the consequences of having unpaid loans in Nigeria? Apparently, there are some but most of us don’t know about this.

Ignorance is bliss because how else does one explain the fact that not many Nigerians do not know that defaulting on loans is actually actionable in court? You can be charged to court for the loans you owe, and eventually end up paying even much more than you bargained for.

Needless to say that defaulting on your loan payments can result in you also getting blacklisted by other lending companies.


Believe it or not, a significant number of loans are taken by fraudsters using stolen identities. While this is a global phenomenon, some Oluwole boys have perfected the act. They take stolen BVNs and create fake IDs to request loans. Even when some lenders ensure that loans can only be disbursed to your account, they open accounts with some banks online with the same BVN just to receive funds.

An increasing cost of living

As much as we want to vilify Nigerians for not paying back their debts, we have to acknowledge at some point that the economy does not make it easy for the average Nigerian. At the beginning of 2020, $1 exchanged for N360 which has mercilessly depreciated to N480 to $1 as of January 2021. So, if at the beginning of 2020, you earned N200,000 per month, which was $555 at the time, you are now, unfortunately, just earning $416 a month. A whopping 15% destruction of your livelihood.

The truth is that when the cost of living is impacted, repayment of loans is definitely going to take a hit!

Our badly torn social fabric

According to Abraham Maslow’s hierarchy of needs, people who have not satisfied their basic needs cannot aspire to things like accountability, self-actualization, and esteem. This is the basic reason why Nigeria has a torn social fabric.

You cannot expect people who have not fulfilled their basic needs like food, shelter to hold things like accountability in high esteem. More so when they have seen our leaders who should serve as a moral example for everyone, get away with owing institutions.


As much as we all hate to admit, Nigeria is not always to blame for our problems, at times, we the people are. The average Nigerian is entitled and believes that they just don’t need to pay back on the due date and the lender can wait till whenever they deem it fit to pay up.

It doesn’t also help that the consequences for defaulting on loans are not widely known. Neither do they care to know that money lent to them are actually other people’s monies.

Financial illiteracy

Most people don’t know how to structure their repayment plans so that paying back does not look like an insurmountable feat. Tying back to the first reason I gave, if we each had financial advisers or planners, we would be able to source better loans with lesser interest rates, and also account for inflation when deciding how many loans we should take and how much we should pay back monthly.

The average person lacks this knowledge that may seem basic. However, if the borrower who earns N100,000 per month (which is the average monthly salary of a Nigerian between 25–29) accounted for inflation, and price hikes here in food, fuel, etc, before taking these loans surely, when these “acts of God Nigeria” happened the effect would have been cushioned and would not affect their loan repayment schedule or plan. Alas, such is not the case!

A compelling reason to pay your loan?

In August 2020, the Central Bank of Nigeria made an announcement that banks and lenders could now retrieve unpaid loans from the different accounts of their borrowers. This is largely facilitated by the BVN which links all accounts owned by a customer.

Before this time, anyone could owe one bank and go to open an account in another without any fear of being found out. Not only would this directive help lenders retrieve their monies easily, but it would also force borrowers to pay up because they know there is no hiding place.

In fact, the only way you can escape paying your loans in 2021 is if you live under a rock.

Finally, please pay your loans because it is the right thing to do. Surely this should need no explanations!