through increased spend on education
and health.
While commercial banks, fintechs and
payday lenders improved the pricing
and general conditions for assessing
these loans, the eligibility criteria still
pre-qualify customers based on certain
features including employment status,
credit history etc., so many middle-class
individuals are still unable to access these
loans.
Conclusion
Can Credit Help?
It is generally believed that to enable
the growth of a strong middle class,
government must come up with effective
policies on how to reduce poverty and
develop human capital for empowerment
to help wealth creation and foster
innovation and entrepreneurship. An
enabling environment for productivity
through the provision of power,
transportation, education, health and
other critical infrastructure will boost
employment and increase aggregate
revenue and per capital income, leading
to increased consumption and a rise in
public savings.
The importance of credit to an economy
cannot be overemphasized; access
to credit facilitates trade and boosts
efficiency of production process. With the
components of the aggregate demands,
especially
consumption,
investment
and government spending, remaining
depressed, it is believed that the availability
of appropriately priced credit with flexible
repayment terms can help to spur
economic activities. On average, access
to credit can lead to increased spending
which in turn, fuels economic activity,
increases investment and CAPEX spend by
companies and ultimately, impacts GDP
positively.
Studies however suggest that policies that
include the promotion of middle-class
growth are cost-effective and generate
longer-term poverty reducing benefits.
Empowering the middle class will require
governments to introduce measures that
bolster the income of those already in
the middle class and implement effective
social policies to expand the middle class
The global middle class is expected to
grow from 3.8 billion in 2018 to 5.3 billion
people by the end of 2030. This positions
the middle class as the largest socio-
economic group and a major driving force
behind global economic growth. Nigeria
can hope to ride this wave of potential
offered by the middle class toward a more
robust economy. Targeted government
spending on infrastructure development
and increasing investment flows to the real
sector using effective fiscal and monetary
measures are very critical. Though it
would amount to an oversimplification
to assume that access to credit alone
would ensure the viability or otherwise
of this very important social class. With
higher purchasing power as measured by
disposable income of individuals to create
and stimulate demand, the Nigerian
economy can increasingly rely on the
middle class as a key source of demand
and consumption, and access to credit is a
good starting point.
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The Corvus | September 2019