A professor of Economics at the Lagos Business School, Prof. Bongo Adi, has revealed that recent research by him and other university dons showed that the proliferation of digital lending apps’ deploying companies in the country has the potential of worsening Nigeria’s poverty level .
The renowned economist, who made this remark during a webinar on ‘Nigeria’s 2023 Political and Business Outlook’ organised by the Lagos Business School Alumni Association, explained that most of the loans by digital lending companies to the citizens were primarily for consumption and not for productive activities.
Adi further hinted that a research conducted by him and other scholars at the LBS showed that people collect loans via their apps, spend them, and then start to look for other means to pay back, adding that in the process, many of them are pushed into debt.
While noting that the middle class is fast disappearing in Nigeria’s socio-economic space as surging inflation continues to erode the purchasing power of many Nigerians, the scholar said that one of the researches he carried out reflected that the bottom of the pyramid, to which many Nigerians had been pushed, has no socio-economic benefit to offer them.
He clarified: “The situation that I’ve observed, based on a new research track that I just started with some colleagues here at Lagos Business School, is that there is no more Fortune at the Bottom of the Pyramid like what we used to say before.
“The bottom of the pyramid has been pushed to its limit as incomes and purchasing power shrink and the majority of households now depend on mere consumption”, the economist added.
Also, he shared the research findings conducted by him and some researchers on the activities of digital lending apps providers, saying that in most cases, credit given to people patronizing them are not usually adequate for sustainable business in view of the current micro and macroeconomic factors in the country.
The economist said: “Now what we also observe is the proliferation of lending agencies and lending companies that lend to households, individuals, and small businesses. They give out not more than N500,000 or N1 million and those are not the amounts you can use to do any sort of sustainable business in Nigeria today.
“What people use that money for is simple consumption, which my research shows is actually pushing them further into poverty. So, they find themselves in a rat race of finding the next income to really pay off debts that they’ve incurred.
“So, that’s the situation right now. The bottom of the pyramid is filled with people that have low income, and we’re talking about a country that has a 63% poverty level. If you look at multi-dimensional poverty, a lot of people are pushed to that level”, Adi maintained.
