‘Only few Nigerian consumers, SMEs enjoy credit facilities from banks’

The Managing Director/ Chief Executive Officer of CRC Credit Bureau Limited, Tunde Popoola said available statistics had shown that only a few Nigerian consumers and Small and Medium Enterprises (SMEs) enjoy credit facilities from Nigerian banks.

Addressing reporters in Lagos, he decried the low level of credit penetration in Nigeria, urging banks to make access to credit easy for small businesses and other consumers.

According to him, Nigeria has been characterised by a significant disproportionate allocation of credit to different sectors, such that the sectors that contribute the most to Gross Domestic Product (GDP) are denied credit.

He said Nigeria’s credit bureau penetration in 2019 was 14 per cent, compared with 30 per cent in Kenya, 25 per cent in Morocco, 79 per cent in Brazil and 83 per cent in Malaysia.

He added that the level of credit penetration represents the availability and ease of access to credit.

“Interestingly, credit bureau penetration follows the same pattern. Credit bureau penetration indicates the number of adults’ population covered by the credit bureau. It is a measure of the number of consumers and businesses enjoying credit in an economy,” he explained.

Furthermore, he noted that credit bureau penetration will certainly be low where credit to the private sector is poor.

“This is just an expression of the fact that only a few consumers and businesses have access to formal sources of credit in Nigeria.”

He observed that while agriculture contributed over 21 per cent to GDP in 2018, the share of bank credit to agriculture was the lowest at 3.8 per cent.

He added that while oil and gas received 23 per cent of bank credit, its contribution to share of GDP was less than 10 per cent.

He also frowned at the cost of borrowing in Nigeria, adding that this serves as a disincentive to businesses especially the Small and Medium-scale Enterprises (SMEs).

Popoola, who spoke on the theme: “Stimulating Economic Growth through improved access to credit,” cited the National Bureau of Statistics report, which states that Nigeria could boast of over 37 million micro, small and medium enterprises (MSMEs), noting that barely 5.3 per cent of total domestic credit to the private sector goes to the sector.

He said this is not minding the fact that the MSMEs represent over 96 per cent of total businesses in Nigeria, in addition to its 49 per cent contribution to GDP.

While calling for increased access to credit in Nigeria, Popoola categorically stated that most successful economies currently are driven by credit.

“For example, as at 2018, American households collectively owed about US$13 trillion and businesses outside the financial sector owed over US$14 trillion, making a total credit of US$27 trillion to the private sector.

“The importance of credit to an economy cannot be overemphasised. Credit propels spending and thereby increases the income levels of a country.

“It enhances productivity and leads to higher GDP, even as it has been proven repeatedly that an economy with strong credit culture improves the standard of living, stimulates growth and assures prosperity of the majority of its inhabitants,” he stated.