Economy
Rising Prominence of Payroll Lending Activities in Nigeria
By Agusto & Co
Prior to the emergence of core payday lenders in the country, commercial banks dominated the financial services sector, providing loan facilities and savings to corporate clients and to a significantly lesser extent, retail customers.
Retail financial services offered were primarily tailored to the upper tiers of the country’s income categories, focusing on high net worth individuals and high earning employees of prominent organisations in the country.
Although alternative lenders such as community banks and credit unions existed, these organisations were often left to operate in the periphery due to the dominance of commercial (and merchant) banks.
In recognition of the dearth of financial services available to the impoverished and low-income earners, the Central Bank of Nigeria (CBN) over the last two decades made various attempts to enhance the delivery to financial services to the Nigerian populace.
Most prominently, the introduction of a microfinance policy in 2005 (and subsequent licensing of over 1,000 operators) was expected to fill the void created by commercial bank operators’ apathy towards individual lending. In spite of this, overall penetration remained low, attributable to inherent challenges including poor access to finance, weak risk management practices and poor understanding of microfinance banking.
As MFBs focused on the economically disadvantaged and low-income earners, the needs of formally employed individuals were largely unmet. Thus, many low to middle-income earners in active employment often sought loans from alternative channels such as family and friends, loan sharks and informal lenders.
Since the 2010s, payroll lending activities have grown in prominence mainly attributable to the unmet demand for small-sum short term credit by low to middle income individuals.
Borrowers often seek these loan facilities to pay recurring bills such as utilities and rent, as well as other expenses such as school fees, medical bills and other unexpected expenses that need to be settled before the next payday.
These loans typically attract high interest rates ranging from 3% to 6% a month, which reflect the risks associated with the average salary earner, as well as the absence of collateral requirements. Core players such as Renmoney, Credit Direct and Zedvance have grown business volumes over the last few years due to the overall gap in the supply of short-term microcredit.
In contrast to traditional lenders, industry operators provide customers with a quick and convenient process for obtaining loan facilities, with disbursement typically within 48 hours of submitting all required documents or the meeting of all conditions.
Unlike personal loans offered by major financial institutions in the country, payday loans are widely recognised for the absence of collateral (and in some cases, guarantor) requirements when granting loans to customers. Lenders typically use the customer’s wages as a basis for lending, with the loan repayment(s) typically a percentage of the borrower’s monthly salary/income.
In correspondence with the rising fortunes of the industry, intensifying competition amongst industry operators and external players, such as commercial banks and nano (micro) lenders, remains a threat to the retail dominance enjoyed by prominent industry operators.
Commercial banks are increasingly offering salary advances and quick credit facilities to individuals that may not typically meet the bank’s risk assessment criteria for traditional products. With a growing number of banks adjusting their respective business strategies to capture the retail segment, we expect competition to remain elevated going forward.
Overall, demand for payday loans should remain high, with a continued influx of new entrants seeking to provide services to the underserved market.
With the burgeoning impact of big data and AI-driven tools, digital financial solutions are expected to play a larger role within the Industry as current operators and new entrants seek to boost efficiency and improve service delivery amid the heightened competitive environment.
By Adedapo Adesanya
Crude production under the collective Organisation of the Petroleum Exporting Countries (OPEC ) fell in May to its lowest level in at least 37 years as the blockade of Iran by the United States and disruptions in the Persian Gulf, continued to limit output.
According to a Bloomberg survey released on Friday, output from the organisation’s 11 current members, including Nigeria, dropped by 1.22 million barrels per day to 16.33 million barrels per day last month.
Iran accounted for more than half of the decline. The data excludes the United Arab Emirates (UAE), which departed the cartel last month after six decades of membership.
War between a US-Israeli alliance and Iran has reduced oil supplies from the Middle East, largely closing the Strait of Hormuz waterway. Saudi Arabia, Iraq, the UAE and Kuwait have been forced to cut crude production. Iranian shipments face additional pressure following a US blockade of its ports imposed in mid-April.
Iranian output fell by 710,000 barrels per day to a five-year low of 2.34 million barrels per day in May, the survey showed. Central Command reported that US forces have redirected 127 commercial vessels to enforce the blockade of all maritime traffic entering and exiting Iranian ports.
Kuwait recorded the second-largest decline last month, with production falling by 310,000 barrels per day to 490,000 barrels per day, less than one-fifth of pre-war levels. Saudi Arabia, the group’s leader, saw output decrease by 240,000 barrels per day to 6.57 million barrels per day.
The production reductions have not prevented OPEC and its allies from raising quotas over recent months, continuing a year-long process of restoring output halted several years ago.
This comes ahead of a meeting scheduled to be held on Sunday, June 7, where a sub-group of seven members is expected to increase targets by 188,000 barrels again in July. The session is one of four online meetings OPEC and its partners plan to hold that day.
Delegates indicated the alliance has plans for two additional monthly quota increases in August and September. UAE output rose by 300,000 barrels per day to 2.44 million barrels per day in May, according to the survey.
By Aduragbemi Omiyale
The 2025 third quarter Budget Implementation Report from the Budget Office of the Federation has shown that the federal government exceeded the funds allocation for repayment of debts for the first nine months of the fiscal year by about 18 per cent.
In a report by Punch, the sum of N10.74 trillion was budgeted for debt servicing between January and September 2025, but the government used N12.63 trillion for the purpose, N1.90 trillion or 17.65 per cent more than the allocation for the year.
The funds were spent on domestic debts, foreign debts and sinking fund by the central government in nine months.
Business Post reports that for the whole year, the amount approved by the National Assembly and signed by President Bola Tinubu for debt repayments was N14.31 trillion.
Looking at the nine-month figures, domestic debt service gulped N6.23 trillion, exceeding its N5.39 trillion provision, while foreign debt service was N6.30 trillion versus the budget provision of N5.06 trillion.
According to the report, the figures indicated that 67.2 per cent of the federal government’s retained revenue of N18.63 trillion was spent on debt service in the first nine months of 2025. When the sinking fund is included, debt-related payments consumed about 67.8 per cent of revenue.
It was also observed that aggregate federal government revenue underperformed the budget by N12.03 trillion or 39.24 per cent, as actual revenue of N18.63 trillion fell short of the N30.67 trillion projected for the first three quarters.
In the third quarter alone, the government generated N7.70 trillion versus the quarterly target of N10.22 trillion as a result of persistent oil revenue shortfalls, despite stronger non-oil collections.
The debt burden also crowded out capital spending, as total capital expenditure was N3.10 trillion in the first nine months compared with the N17.58 trillion budgeted for the period, indicating that actual debt-related payments were more than four times capital expenditure.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a loss of 1.13 per cent on Thursday, June 4, shrinking the market capitalisation by N30.03 billion to N2.630 trillion from N2.660 trillion on Wednesday.
Similarly, this brought down the NASD Unlisted Security Index (NSI) by 50.19 points to 4,396.08 points from the 4,446.27 points recorded a day earlier.
The loss was influenced by the overpowering of the bulls by the bears, after the bourse closed with two price gainers and three price losers, led by FrieslandCampina Wamco Nigeria Plc, which slumped by N20.03 to sell at N190.38 per unit compared with midweek’s N210.41 per unit. Food Concepts Plc declined by 25 Kobo to trade at N2.50 per share versus the previous day’s N3.00 per share, and Acorn Petroleum Plc crumbled by 2 Kobo to end at N1.32 per unit, in contrast to the preceding session’s N1.34 per unit.
For the gainers, Central Securities Clearing System (CSCS) Plc added N2.93 to close at N78.34 per share compared with the previous price of N75.41 per share, and Afriland Properties Plc gained 80 Kobo to settle at N16.80 per unit versus N16.00 per unit.
There was a slip in the volume of transactions yesterday by 46.8 per cent to 280,714 units from 527,221 units, as the value of trades dropped 66.5 per cent to N21.8 million from the preceding session’s N64.2 million, and the number of deals fell by 8.7 per cent to 42 deals from 46 deals.
Great Nigeria Insurance (GNI) Plc ended the session as the most traded stock by value on a year-to-date basis with 3.4 billion units worth N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 64.7 million units traded for N4.4 billion.
GNI Plc also finished the day as the most traded stock by volume on a year-to-date basis with 3.4 billion units valued at N8.4 billion, followed by Infracredit Plc with 2.3 billion units exchanged for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
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