Nige­ria Lags Be­hind in Con­sumer Lend­ing, to Get Boost with New Law


Nige­ria is trail­ing South Africa and other coun­tries in terms of con­sumer lend­ing as only 10 per cent of its loans are for con­sumer lend­ing. This is lower than 45 per cent in South Africa, 33 per cent in Brazil and 18 per cent in In­done­sia.

How­ever, the sign­ing of the Credit Re­port­ing Act, 2017, into law on May 30 by act­ing Pres­i­dent, Prof. Yemi Os­in­bajo is sig­nif­i­cantly deep­en­ing con­sumer lend­ing in Nige­ria.

Speak­ing in an in­ter­view with THISDAY, the Man­ag­ing Direc­tor/Chief Ex­ec­u­tive Of­fi­cer of CRC Credit Bureau Lim­ited, Mr. Tunde Popoola, said the new law her­alds sig­nif­i­cant phe­nom­e­non in credit re­port­ing in Nige­ria.

“One thing that gov­ern­ment has done and we must com­mend them is the en­act­ment of the Credit Re­port­ing Act. Be­fore now, we did not have an en­abling leg­is­la­tion that is pro­vid­ing cover for our in­dus­try. The Credit Re­port­ing Act is just a very ex­cel­lent way of sup­port from gov­ern­ment,” he said.

Ac­cord­ing to Popoola, commercial banks have not been do­ing more con­sumer lend­ing be­cause track­ing non-per­form­ing bor­row­ers is dif­fi­cult.

“Be­sides, con­sumer transac- tions are too small and ex­pen­sive to man­age. There is difficulty man­ag­ing mil­lions of bor­row­ers and non­per­form­ing loans, fear of mul­ti­ple iden­ti­ties and fraud. There is also the is­sue of wrong lend­ing model lack of ex­per­tise, tech­nolo­gies and lack of unique bor­rower iden­tity,” he said.

Popoola noted that apart from the Act, the Bank Ver­i­fi­ca­tion Num­ber (BVN) will equally im­pact pos­i­tively on the level of con­sumer lend­ing in the coun­try.

“With BVN, means of iden­ti­fi­ca­tion is be­com­ing eas­ier and eas­ier and that is as­sist­ing the ef­fi­ciency of pro­cess­ing data be­cause we now can iden­tify peo­ple with their BVN rather than with their names. Be­fore, when in­put a name into sys­tem, so many peo­ple come up on the sys­tem. But to­day, if you use their BVN, only one name comes up,” he said.

The CRC Credit Bureau Lim­ited boss added that the FICO Score recently in­tro­duced into the coun­try will equally boost con­sumer lend­ing.

“FICO Scores will know the risk level of ev­ery bor­rower and able to di­men­sion whether it is good, ex­cel­lent, av­er­age or bad. And with that, you can now have di­men­sion of re­la­tion­ship you want to have with such an in­di­vid­ual,” he said.

Popoola ex­plained that in­tro­duc­tion of FICO Score will change the face of con­sumer lend­ing in Nige­ria as it will give op­por­tu­nity for fi­nan­cial in­clu­sion and pri­vate in­di­vid­u­als who don’t have op­por­tu­nity will now have op­por­tu­nity to bor­row and also give op­por­tu­nity to lenders to give loans to peo­ple who have credit wor­thy based on the in­for­ma­tion they will get from FICO.

He said that FICO Scores is a three digit scores that is be­tween 300 to 850, not­ing that the higher it is the bet­ter the per­son is rated and the lower it is the higher the risk that in­di­vid­ual is car­ry­ing.

“No in­sti­tu­tion will give money to some­body with low scores. And once you have the scores (as lenders) you can now de­cide to dif­fer­en­ti­ate who you want to lend your money to, whom you want to give your prod­uct to and the kind of con­di­tion that you want to at­tach to such re­la­tion­ship be­tween lenders and bor­row­ers and buy­ers of prod­ucts and mak­ers of prod­ucts,“he said.

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