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By Merit Ibe
The Chairman of the Alliance for Economic Research and Ethics, Dele Oye, has raised concern over the growing burden of high-interest digital loans in Nigeria, noting that poor and vulnerable Nigerians are being trapped in a cycle of debt by digital lending platforms charging more than 300 per cent interest annually.
Oye, in a statement titled “The Mathematics of Marginalization: Decoding Nigeria’s Poverty Premium,” said Nigeria’s economic system was increasingly penalising poor citizens, forcing them to pay more for basic necessities such as food, healthcare, housing and access to credit.
He called on the Central Bank of Nigeria (CBN) and relevant regulatory authorities to enforce interest rate caps on digital loans and strengthen consumer protection measures to prevent exploitative lending practices.
Oye noted that, “In the complex economic landscape of Nigeria, a brutal mathematical reality persists: it is profoundly expensive to be poor. This phenomenon, known as the poverty premium, ensures that individuals with the least liquidity systematically pay the highest rates for basic goods, services, and credit. Far from being a mere emotional burden, poverty operates as an extractive economic mechanism.
“Recent data from the World Bank indicates that 41.82% of Nigerians live below the international poverty line of $3.00 per day, while 47.03% experience multidimensional poverty. When 140 million people navigate an economy that penalizes scarcity, the resulting financial extraction is not an individual failure but a systemic design flaw.”
According to him, many financially excluded Nigerians who lack access to affordable bank credit are turning to digital loan applications, where excessive interest charges and hidden fees often worsen their financial struggles.
The report cited cases where borrowers obtained N65,000 loans but were required to repay N93,000 within seven days, with penalties increasing the debt to as much as N158,000 after default.
Oye said such practices had created a poverty trap, where those with the least financial resources often pay the highest costs for survival.
Oye stated that poor Nigerians are unable to benefit from economies of scale because they often buy food items in smaller quantities, resulting in higher prices compared with wealthier households who can purchase in bulk.
He also raised concerns about healthcare costs, noting that inability to afford preventive treatment often forces poor families to delay medical attention until conditions become more expensive to manage.
He said, “The fundamental disadvantage of low income is the inability to access economies of scale. Wealthier households purchase commodities in bulk, such as a 50kg bag of rice that lasts several months. In contrast, low-income earners are forced to purchase micro-units daily from roadside vendors or open markets. These micro-transactions carry significant markups. Over a financial quarter, the impoverished consumer spends considerably more per kilogram for the exact same staple food, while remaining vulnerable to daily price fluctuations driven by transport costs and weather conditions. The poorest decile of Nigerian households experiences effective inflation rates significantly higher than the wealthiest decile.
“In the absence of liquidity, preventative healthcare becomes an unaffordable luxury, transforming minor ailments into catastrophic financial events. A routine malaria test costing ₦5,000 is frequently deferred until the condition escalates, resulting in a ₦50,000 hospital admission. A missed typhoid diagnosis translates not only into higher medical costs but also into weeks of lost wages. For the 41.82% of Nigerians living below the $3.00 daily threshold, a single medical emergency does not merely deplete savings; it creates enduring debt obligations that can take years to clear.
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“Perhaps the most aggressive manifestation of the poverty premium occurs in the credit markets. The formal banking sector largely excludes low-income earners who lack collateral, formal salary slips, or credit histories. Consequently, 26% of Nigerian adults remain completely financially excluded, with this figure rising to 47% in the Northeast and Northwest regions. In the absence of formal credit, vulnerable populations turn to digital loan applications. These platforms frequently impose interest rates exceeding 300% annually. Documented cases reveal borrowers taking ₦65,000 with demands to repay ₦93,000 within seven days; upon default, predatory late fees rapidly balloon the debt to ₦158,000.”
On housing, Oye said many Nigerians were facing severe affordability pressures, with renters spending between 40 and 50 per cent of their income on accommodation, while upfront rent demands of one or two years further deepen financial hardship.
He advocated reforms including stricter regulation of digital lenders, targeted social protection programmes, affordable housing initiatives, improved access to basic banking services and support for informal sector workers.
Oye warned that unless deliberate measures are taken to address these structural challenges, millions of Nigerians will continue to face an economy where poverty itself increases the cost of living.
In another statement titled, “The Unquestioned Pain: How Nigeria’s Lived Realities Are Becoming a Culture of Trauma and Why We Refuse to Accept It,” Oye linked Nigeria’s poverty crisis to worsening social outcomes, including child mortality, warning that deprivation was contributing to poor health conditions among children.
He noted that more than 115 out of every 1,000 Nigerian children die before reaching the age of five, linking the high under-five mortality rate to factors associated with poverty, including inadequate nutrition, limited healthcare access and poor living conditions.
He warned that the consequences of poverty were not limited to present hardship but could be transferred across generations, as children growing up in deprived environments face greater risks of malnutrition, poor education outcomes and reduced economic opportunities.
The report also highlighted that 133 million Nigerians are living in multidimensional poverty, arguing that the challenge was not simply a lack of individual effort but the result of structural failures that continue to limit citizens’ ability to improve their lives.
Oye stressed that Nigeria must move beyond managing hardship and begin addressing the systems that allow poverty, insecurity and inequality to persist.
He stated, “Nigeria is not a poor country; it is a wealthy country with poor people. With vast oil and gas reserves, a massive youthful workforce, and an entrepreneurial spirit that defies logic, Nigeria possesses the ingredients for profound prosperity. Yet, according to the National Bureau of Statistics and the World Bank, 63% of persons living within Nigeria approximately 133 million people are multi-dimensionally poor.
“Furthermore, World Bank projections indicate that more than half of all Nigerians (52.5%) are estimated to live in monetary poverty in 2025 (4). This is not poverty born of scarcity. It is poverty engineered by design, or by the absence of it. When food inflation reached a staggering 40.87% in mid-2024 and recent reports indicate that over 50% of Nigerians spend nearly their entire monthly income on food, poverty becomes a weapon that disarms an entire population. When national stunting prevalence affects 32% of children under five, poverty becomes an intergenerational sentence.
“The trauma here is not merely material; it is psychological. Research on intergenerational trauma and urban poverty demonstrates that chronic exposure to deprivation and instability leads to learned helplessness, the perception that no matter what one does, circumstances cannot change. For Nigerian children growing up in households where parents have withdrawn into worry, the trauma is being encoded into their neurology. They are inheriting not just poverty, but the expectation of poverty.”
