Inflation is reshaping financial habits in Nigeria as more households turn to borrowing

Kasi Insight's Cost of Living Tracker provides essential insights into the evolving economic landscape across Africa. Conducted quarterly in 20 African markets, this tracker offers a comprehensive analysis of consumer behavior, spending patterns, and perceptions of price changes in both essential and non-essential goods and services.

In 2024, nearly half (48%) of Nigerians reported that rising prices had made it harder to afford necessities such as food, transport, and airtime. The impact was particularly severe among low-income households, with 60% expressing significant concern over their declining purchasing power. Millennials also felt the strain, with 51% stating that inflation had worsened their ability to cover essential expenses. Families with children faced additional financial pressure, as 52% reported that inflation had made managing basic costs more difficult. While 42% of high-income earners also acknowledged financial strain, they remained less affected than their lower-income counterparts.

In contrast, high-income earners and households without children experienced less financial strain from rising inflation. While 23% of high-income individuals reported that inflation had improved their ability to meet daily expenses, only 9% of low-income earners shared this sentiment. Similarly, 21% of households without children said inflation had positively impacted their ability to manage costs, compared to just 18% of households with children

Borrowing is becoming a lifeline for many households

With inflationary pressures mounting, borrowing has become a survival strategy for many Nigerians trying to manage their daily expenses. Overall, 67% of respondents reported borrowing occasionally, while 20% said they borrow frequently. The burden is most severe among low-income households, with 70% borrowing occasionally and 19% borrowing often. Middle-income earners also exhibit high borrowing tendencies, with 69% borrowing occasionally and 20% borrowing frequently. High-income earners, while less affected, are not exempt, with 62% reporting occasional borrowing.

Millennials are the most affected generational group, with 70% borrowing a few times and 20% borrowing often, underscoring their financial vulnerability amid rising costs. Gen Z faces even greater strain, with 62% borrowing occasionally and 22% borrowing frequently—the highest rate of frequent borrowing among all age groups. This trend highlights the growing financial challenges younger generations face, particularly as the costs of essentials like food and transport continue to rise.

Financial institutions and brands can ease inflation’s burden with tailored solutions

As inflation continues to strain household budgets in Nigeria, financial institutions and brands have a unique opportunity to provide relief by developing tailored solutions for low- and middle-income consumers. Affordable credit products, such as flexible micro-loans with lower interest rates and adjustable repayment plans, can help ease financial burdens—particularly for Millennials and Gen Z, who are borrowing at higher rates than older generations. Additionally, launching financial literacy initiatives focused on debt management, budgeting, and savings can empower consumers to navigate economic challenges while positioning brands as trusted financial partners.

Families with children, who are disproportionately affected by inflation, would benefit from targeted savings products and investment plans designed to ease essential expenses. Financial institutions can introduce special savings accounts with incentives for long-term goals like education and healthcare, providing much-needed financial stability. Meanwhile, brands can build consumer confidence by offering solutions such as “inflation-proof” products, price-lock guarantees, and flexible payment options that help households maintain purchasing power amid rising costs.

While high-income earners feel less of an impact from inflation, they remain interested in financial products that enhance their wealth and provide added value. Offering exclusive wealth management services, high-return investment products, and premium perks can help financial institutions attract and retain this segment. By addressing the needs of different income groups, financial institutions and brands can strengthen consumer trust and position themselves as essential partners in navigating economic uncertainty.

Contact our team today to explore how our economic intelligence can empower your decision-making process. Win with confidence with Kasi Insight. https://www.kasiinsight.com

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