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Statistics Show Bank Loan Terms, FG Policies Affect Youths Access To Credit Facility in Nigeria

Last updated on August 5th, 2023 at 09:20 pm


One of the impediments to business financing in Nigeria is either bad policies from the government or stringent terms by the banking institutions or both.

Nigerian youths are mostly affected by the challenges because small business owners in the South, West, North, and East are not able to achieve business goals due to high interest rates by banks.

According to the data from the National Youth Survey for 2020 by the National Bureau of Statistics (NBS), which was released on Monday, October 4, 2021, 31.7percent of youths are unable to finance their business due to lack of access to credit facility from banks.


Some of the difficulties they face, according to the data, revealed that tough loan terms or killing interest rates by banks, and unfriendly government policies deter them from accessing bank loans.

How do you expect a startup to cope with an interest rate of 15% or 20% to grow? Any government that wants its SME to grow must work on policies that will encourage single digit interest rate

While stringent bank policies accounted for 24.8 per cent of the challenges, 7.3 per cent attributed their difficulties to unfriendly government policies, and other reason take 13.2 percent

Using Geopolitical Zones

Part of the data on NBS read, “At zonal level, youths from South-South 45.7 percent and South West 35.5 percent could not access bank loan due to high rate of interest rate; while youths from North-West 54.5 percent and North-Central 33.8 percent could not access bank loans due to stringent policies.

“Youths from South-South 15.7 per cent and North-East 13.3 per cent could not access bank loans due to government policies.”

Other challenges faced by youths in accessing loans include:

  • Inconsistency in government policies.
  • Obsolete equipment
  • Lack of proper training in relation to their businesses.
Also Read:  100 for 100 PPP CBN Loan Application Process

How They Source For Loan

While the challenges were enough for them to give up, the unrelenting spirit would not allow them as find alternative sources of business financing, which include;

  • Personal savings,
  • Loans despite the high interest rate,
  • Family sources,
  • Cooperative or Esusu
  • Grants and
  • Other sources like part time or freelance jobs
Here is the breakdown:
  • Government grant: 34.5%
  • Personal savings: 29.7%
  • Cooperative: 15.1%
  • Cooperative thrift: 2.4%

On the zonal level, the data show that 96.6% of youths from South-South support their business ideas through grants.

More Nigerian Females Have Access To Bank Loans Than Males

The statistics which was done in conjunction with the Federal Ministry of Youth and Sports Development revealed that more female youths in Nigeria had access than their male counterparts.

While female had 55.1 percent access to loans, 44.9 percent of males had access.

What this data mean

We’ve seen several billions of naira in credit facilities rolled out by the government after the pandemic, one of them is AGSMEIS loan, but thousands of the applicants keep complaining how they were frustrated by the terms.

Some of the applicants complained of the exploitation by some the accredited EDI centres ( spread across the country

This means government needs to do more.

Rolling out billions of naira as loans to support startups isn’t enough, government needs to follow up to the point of implementation to make sure that loans are given to the right people and used for the purpose it was designed for

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