THE PSYCHOLOGY OF BORROWING AMONG NIGERIANS:

Borrowing has become a way of life for many Nigerians. With banks, cooperatives, and loan apps offering quick credit, access to debt is easier than ever. But the real issue is not availability—it is how loans are used.

When applied to personal spending, borrowing often causes more harm than good. Many Nigerians take loans to buy food, pay rent, or fund weddings, birthdays, and burials. Others borrow for luxury items like phones or designer clothes, simply to “belong.” While these choices may ease short-term pressure or boost social image, they create long-term strain. High interest rates—sometimes above 20%—mean borrowers end up repaying far more than they received. In the end, the borrowed money is gone, but the debt remains. This cycle of taking new loans to cover old ones has trapped many families in endless financial stress.

By contrast, borrowing can be beneficial when used for business. For traders in Lagos markets, farmers in Benue, or contractors in Abuja, loans can mean expansion and survival. A small shop owner who borrows to restock goods can generate profits to cover repayment and still grow the business. A farmer who invests in equipment through a loan can boost harvests and income. In these cases, borrowing is not for consumption but for production, and the money works to create more money.

The psychology behind both approaches is very different. Personal borrowing is often driven by impulse, social pressure, and short-term needs. Borrowers convince themselves repayment will somehow work out, only to be overwhelmed later. Business borrowing, however, is usually tied to planning and purpose. Entrepreneurs think about returns, timelines, and how credit can boost productivity. The difference lies in whether the loan creates value or merely satisfies desire.

Unfortunately, many Nigerians fail to separate the two. Some borrow under the pretense of business but spend the money on personal matters. Others drain business profits to service personal debts, leaving enterprises weak and unstable. This confusion keeps people poor even when credit is available.

In conclusion, borrowing in Nigeria is not the problem—the purpose is. Loans for personal spending often lead to stress, harassment, and poverty, while loans for business can fuel growth and financial independence. Nigerians must shift their mindset: debt should be a tool for investment, not a trap for consumption.

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