CEO Decries Poor Access to Credit in Nigeria

Raheem Akingbolu

Only two per cent of Nigerians have access to credit facilities, the Chief Executive Officer of Dun & Bradstreet Credit Bureaus, based in the Dominican Republic, Miguel Llenas, has stated.

Speaking at the CRC Credit Bureau industry forum themed, “Growth & Innovation in Retail Banking: Building Sustainable Business Models” recently in Lagos, Llenas said for the economy to leapfrog, Nigerian banks must support businesses with the required credit.

To this end, he called on financial institutions in the country to lend to consumers, adding that, “you don’t develop a nation when you lend money only to corporate but to the people.”

According to him, Nigerian banks offer credit to few corporates, which he said constitutes only about two percent of the entire population.

“The banking system in Nigeria only has its focus on only about two per cent of the population. What happens to the remaining 98 per cent?”

Llenas, who argued that Nigeria’s concentration on the bond market cannot translate into economic development further argued that lending money to SMEs would grow the economy.

“Lending to small people that will engage in productive things that will grow the economy is more profitable than giving a $100million to a large oil corporation”, he added

In his presentation, a guest Speaker and Senior Consultant, EMEA, Fair Isaac Corporation (FICO), Peter Ould, who spoke about new trends in global in credit scoring as well as the need for banks to embrace the mandatory International Financial Reporting Standards (IFRS) 9 reporting system, said technology and digitalisation was the way to go. “For efficient lending, automated processes to make decision in a matter of seconds and not days as well as the urgent need to make use of machine learning modules are very essential,” he added.

For Ould, the key messages for credit lenders was the need to identify real untapped potentials in data and knowing that the key to unlocking the key values from big data is balancing artificial intelligence with human intelligence.

In his opening remarks, Managing Director, CRC Credit Bureau Nigeria Limited said Africa’s retail banking revenue has been estimated to grow to US$ 53billion (about N19.08trillion) by 2022. The figure represents 41 percent of the total banking revenues in the region in the next four years with Nigeria, South Africa among growth drivers.

According to a 2018 African banking report recently released by McKinsey, the expected growth in revenues will come from South Africa, Egypt, Nigeria, Morocco, Ghana and Kenya.

McKinsey, in its report, noted that Africa’s banking markets are among the most exciting in the world as the continent’s overall banking is the second fastest-growing and second most profitable of any global region, and a hotbed of innovation.

“Africa’s banking revenue pools to grow at 8.5 percent a year between 2017and 2022, bringing the continent’s total banking revenues to US$129billion”, McKinsey said.

McKinsey added: “Africa’s retail banking markets are ripe with potential and present huge opportunities for innovation and growth”.

“However, Nigeria, most populous nation in Africa, has a herculean task before it to speedily expand its retail banking market as report showed that is lagging behind. According to available financial institutions in Nigeria provide less than 10 percent of its credit facilities to consumers and MSMEs compared to other emerging economies.

“Indonesia provides 18 percent of its banking sector credit facilities to consumers and MSMEs while Brazil has grown to 33 percent and South Africa far ahead of them all at 45 percent,” he stated.

Managing Director/Chief Executive Officer, CRC Credit Bureau Limited, Tunde Popoola, pointed out that Nigeria, would soon take its place in the comity of nations as regards consumer lending.

He added, “Following the enactment of the Credit Reporting Act, 2017 and our launch of a global scoring platform, it is expected that the value of consumer loan would grow exponentially”.

Popoola disclosed that CRC Credit Bureau was positioned to help banks and other institutions successfully manage their retail lending business on a scale that enables exponential financial growth. “From just over one thousand customer base in 2009, repository records show that it has grown to about 17million in Nigeria”. He mentioned that the targets of CRC are millions of Nigerian consumers and tremendous untapped opportunity to grow asset size and profits

“Our goal is to grow bank assets and profitability in a healthy way, prevent systemic risk by diversifying loan portfolio and grow Nigeria’s GDP,” he added.