‘Only 2% of Nigerians have access to credit facilities’
Chief Executive Officer (CEO), Dun & Bradstreet Credit Bureaus, based in the Dominican Republic, Miguel Llenas, has bemoaned the low access to credit facility in Nigeria, saying only two per cent of the population can still access bank loans.
Llenas, at the CRC Credit Bureau industry forum held recently in Lagos, said it is almost impossible for the economy to grow if “ordinary Nigerians” cannot access credit.
Llenas, a former banker with over three decade experience, said “you don’t develop a nation when you lend money only to corporate but to the people.”
He noted with regrets that Nigerian banks offer credit facilities to mostly the public sector and a few corporate, which constitute only about two per cent 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 argued that Nigeria’s concentration on the bond market cannot translate into economic development; while lending money to small people will 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
A guest Speaker and Senior Consultant, EMEA, Fair Isaac Corporation (FICO), Peter Ould, who spoke about the new trends in global credit scoring as well as the need for banks to embrace the mandatory IFRS 9 reporting system, said technology and digitalisation is the way to go.
Ould said: “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 that the key messages for credit lenders was the need to identify real untapped potential 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, Chairman, CRC Credit Bureau Nigeria Limited, Dr. Greg Jobome, said Africa’s retail banking revenue has been estimated to grow to $53billion (about N19.08trillion) by 2022. The figure represents 41 per cent 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 per cent a year between 2017and 2022, bringing the continent’s total banking revenues to $129 billion,” 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 per cent of its credit facilities to consumers and Micro, Small and Medium Enterprises (MSMEs) compared to other emerging economies.
Indonesia provides 18 per cent 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 per cent.
Managing Director/Chief Executive Officer, CRC Credit Bureau Limited, Tunde Popoola, assures that Nigeria will soon take its place in the comity nations as regards consumer lending.
He said 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 1000 customer base in 2009, repository records show that it has grown to about 17 million in Nigeria,” adding that the CRC targets 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 said.
In addition, the World Bank has projected that by the Year 2020, one billion adults currently excluded from traditional financial systems will gain access to some form of banking services.
The Bank, however, noted that the future of retail lending is in embracing financial technology for financial inclusion.
“Today and tomorrow belong to those who are able to play in retail banking. The drivers of any sustainable retail lending business model include digitisation and Data driven decisions,” the World Bank stated.