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Stakeholders advocate use of credit scores for interest rates negotiations

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Senior Financial Specialist, International Finance Corporation, Ubang Awah (left); Chairman, Credit Bureau Association of Nigeria (CBAN) and Managing Director, XDS Credit Bureau, Mrs. Mobolanle Adesanya; Minister of State for Industry, Trade & Investment, Hajia Aisha Abubakar; and Managing Director, CRC Credit Bureau, Babatunde Popoola at the Credit Bureau Association of Nigeria 4th National Credit Reporting Conference in Lagos, on Tuesday.

Stakeholders and operators of Credit Bureaus have advocated the deployment of instruments in improved credit infrastructure, to address the issue of high interest rates as part of measures to facilitate economic growth and recovery.
  
According to them, instruments like the unique identifier and credit scoring system can assist operators to address insufficient credit history, and provide information for the lender to use to make a reasonable judgement as to whether to extend credit or not.

Speaking at the fourth national credit reporting conference organised by the Credit Bureau Association of Nigeria (CBAN) in Lagos, on Tuesday, the stakeholders also highlighted the need for harmonisation of data as well as information sharing among operators. This is to proactively check the rising cases of non-performing loans as well as to check the integrity of credit report accessed.

The Minister of State for Industry, Trade and Investment, Hajia Aisha Abubakar, expressed government’s readiness to support measures that will improve the contributions of Micro, Small and Medium Enterprises (MSMEs) to the nation’s Gross Domestic Product (GDP). The Credit Reporting Act 2017, and the Secured Transactions in Movable Assets Act (also known as the Collateral Registry Act) 2017, recently passed into law by the Senate, will assist operators in their quest to promote credit reporting in

Nigeria as well as lead to increased access to credit by small businesses. The Chairman of CBAN, Mrs Mobolanle Adesanya, expressed optimism that the new laws would aid compliance by operators and help in addressing economic challenges mitigating the growth of small businesses.
   
On her part, Reform Leader, Enabling Business Environment Secretariat (EBES)/ Presidential Enabling Business Environment Council (PEBEC), Mrs Funmi Ilamah, said the passage of both Acts will facilitate credit information sharing between the Credit Bureaus and lenders asw well as lead to a reduction in the risk premium charged on credit, especially to MSMEs. And thereby increase the availability of credit and ultimately reduce costs.
 
“Likewise, for the Collateral Registry Act, the new legal framework will give confidence to lenders to utilise the Registry, and thereby make credit more readily available, and at a cheaper rate, to MSMEs and individuals through the use of their movable assets as collateral,” she added.
  
The Director, Banking Supervision, Central Bank of Nigeria (CBN), Ahmad Abdullahi, noted that the apex bank as a regulator is consulting with stakeholders on the unique identifier system. This is to ensure that information sharing is promoted, while also ensuring incentives like reduction in interest rates is offered to borrowers who fully disclose their credit history.
  
The Managing Director/CEO, CRC Credit Bureau, Tunde Popoola, added that with the laws, stakeholders should work together to promote ease of access to credit, and also experience the transformation tools they offer.



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