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A growing number of Nigerians are turning to mobile money platforms for quick loans, driven not by business ambition but by the desperate need to survive. While mobile money has been widely celebrated as a tool for financial inclusion, recent insights suggest its rapid rise may be eroding the foundations of Nigeria’s microfinance sector and doing little to support the growth of small businesses genuinely.
According to the latest State of the Industry Report on Mobile Money 2025 by the Global System for Mobile Telecommunications Association (GSMA), mobile money usage for loan access has soared across developing regions, with Nigeria seeing one of the most significant year-on-year spikes. In 2024, 11 per cent of Nigerian mobile money users accessed loans through their devices, a steep increase from just 3 per cent in 2023.
However, the purpose behind these loans raises critical concerns.
Rather than fueling entrepreneurship or small business development, which was once the promise of microfinance, these mobile loans are increasingly being used by Nigerians simply to get by. From food purchases to emergency health expenses, the average borrower is less a business owner than a struggling household head. The situation in Nigeria reflects broader patterns seen in other developing countries. In Bangladesh, mobile loan usage jumped from 7 per cent to 14 per cent in one year. Pakistan and India each moved from below 5 per cent to between 14 and 15 per cent in the same period. While the convenience of mobile-based borrowing is undeniable, the long-term effect on local economies and financial ecosystems remains unclear.
The GSMA notes that mobile money providers are increasingly offering credit products, often in partnership with banks or fintechs. About 38 per cent now work with formal financial institutions, while another 26 per cent have joined forces with technology-driven companies. Between September 2023 and June 2024, the number of customers taking loans via mobile money increased by 50 per cent, and monthly loan volumes rose by 54 per cent.
On paper, these numbers suggest growth and inclusion. In reality, this surge may be drawing attention and resources away from traditional microfinance institutions which have long provided structured, community-based financial services tailored for small-scale traders and entrepreneurs.
Mobile loans are typically small, carry high interest rates, and require repayment in very short periods. These terms are hardly suitable for business development. Without proper vetting or support, there is a growing risk of borrowers falling into cycles of short-term debt. Critics fear the rise of digital debt traps among Nigeria’s most financially vulnerable groups.
“We are witnessing a situation where credit is more available, but less meaningful. People can now borrow instantly, but not in ways that build lasting stability or business capacity. The original mission of microfinance is being lost in the rush to digitize access,” says a financial inclusion expert based in Abuja.
To address these concerns, there is an urgent need to reimagine how mobile money credit services function in Nigeria. The current model expands financial access on the surface but quietly undermines the systems that were designed to support real, long-term economic growth. While mobile money may be a powerful enabler, its role in truly supporting small business development remains in question.
