‘Credit Bureaux Positively Impacting Nigerian Economy’
The introduction of credit bureaux in the management of risks associated with lending in the country has positively impacted the Nigerian economy, the Chairman, Credit Bureau Association of Nigeria (CBAN), Mr. Tunde Popoola, has said.
Speaking at a media briefing in Lagos at the weekend, Popoola, who is also the MD/ CEO of CRC Credit Bureau said the positive activities of credit bureaux reflected on the country’s improved ranking on Ease of Doing Business, decline in the rate of non-performing loans, increased access to credit facilities, shift in loan concentration, among others.
According to the chairman, being a central repository of credit information and as mandated by the law to keep information on borrowers for a period of 10 years, has been of great help to lenders as the burden of storing large data had been taken off them.
He stated that: “Credit bureaux perform key functions in any economy. They help reduce information asymmetry between lenders and borrowers thus helping lenders make informed lending decisions.
“Credit bureaux are also social institutions that shape behaviour that engender honouring business agreements and obligations.
“It makes possible the processing of tons of loan applications every day and in an automated manner. They maintain a database of borrowers for lenders. In this way lenders have a valid way of identifying borrowers.
“Credit bureaux usually keep information regarding the contact address of individuals and companies including a history of loans that have been received, if they were paid on time and how many days late they were paid if they were overdue. There is also information on bankruptcy if any has been filed.
“Credit bureaux increase access to credit in any economy. Individuals have greater access to loans based on their good credit history. “This is particu- larly important to micro,small and medium scale enterprises (MSMEs) who may not be able to meet the collateral and security demands of banks but have a good credit history. These MSMEs would still have access to credit based on the strength of their good credit history and it is the credit bureaus that enable this,” the Chairman said.
He stated that credit bureau services are not limited to banks but to other sectors such as insurance, telecommunications, real estate firms, among others.
The CBAN chairman explained that, “every firm that grants credits or transacts on a pay-later basis can use the services of a credit bureau to know the credit status of its customers and their repayment ability before doing business with them. Employers can also use credit bureaus to check the credit history of potential employees.
“This is of relevance to firms considering individuals for finance, senior management and other strategic positions.” he said.