Stakeholders at the 2024 yearly lecture of the Chartered Institute of Bankers of Nigeria (CIBN) have called for the adoption of appropriate credit culture to pave the way for an enhanced loan securitisation process and availability of credit to the real sector.

Speaking on the theme, ‘Improving Availability of Credit in the Nigerian Real Economy: The Critical Importance of Liquidity’, the experts pointed out that the ratio of domestic credit to the private sector as a percentage of GDP in Nigeria, which is currently put at as low as 14 per cent, there is the need to ensure a high level of discipline in the entire risk sharing process.

Available statistics have shown that ratio of domestic credit to the private sector as a percentage of GDP in Egypt will be put at 30.85 per cent by 2022 while South Africa has 92.2 per cent, China and U.S. figures also stood at 185 and 216 per cent respectively.

A professor of international finance law, at University College, Graham Penn, said Nigeria must grow its secondary loan market to boost capital formation and grow the economy.

He pointed out that the U.S. secondary loan market grew from $8 billion in 1991 to $743 billion in 2019, representing an annual growth rate of 28.5 per cent, giving credence to the importance of loan securitisation in any jurisdiction.

Penn urged banks to ensure that they structure their deposits and diversify funding for businesses to maximise their ability to create access to credit.

Director of Risk Management Department of the Central Bank of Nigeria, Blaise Ijebo, said a foundation of proper credit securitisation must be created, both at the demand and supply side to establish the right attitude from the risk-sharing process to credit portfolio, documentation, credit scoring and credit life cycle.

“We need to build that foundation and it is only when the foundation is right and that foundation is not just only for the CBN to put out policies and regulations which we will do, but on the banking side and consumer side, this culture has to be established for a house like this to stand well for the benefit to accrue to the country,” he said.

Chief Executive Officer of WVL Development Advisers Ltd, Dr. Waheed Olagunju, stressed the need for government to establish a consumer credit corporation and a credit guarantee scheme to provide a conducive environment, tackle constraining factors and make the entire loan securitisation process more viable.

According to him, for banks to design financial instruments, challenges that inhibit the performance of credit must be put into consideration.

He added that the government should create a conducive environment and tackle the issue of parlous infrastructure to enable business operators to imbibe a good credit culture and ensure that the primary lenders survive while providing access to credits.

A professor of economics at Babcock University, Segun Ajibola, said there is a need to constitute a committee that comprises bank CEOs, regulators, operators and the CIBN to access the entire gamut of credit securitisation and find ways of bridging the gaps in the process.

“There is this belief that there are many incentives in doing things anyhow in the credit market, we must put a stop to it, we have loans that we cannot account for, this kind of market requires a high level of trust. Too many factors weaken the quality of the loan, we need to sort out professionals to migrate to this kind of market,” he said.

The President of the institute, Dr Ken Opara, said ensuring adequate liquidity in the banking system is fundamental to fostering sustainable economic growth.

He pointed out that the percentage of access to credit to the real sector is relatively low in Nigeria, stressing the need to deepen credit facilities in critical sectors of the economy.

Opara said the recapitalisation exercise would further empower banks to deepen access to credit to the productive sector and enable them to fund mega transactions.

He urged the government to improve the ease of doing business in Nigeria, develop infrastructure and harmonise taxes to promote sustainable growth.

Highlighting some of the volumes of credit to the key sectors in Nigeria with the agricultural sector having N5.8 trillion, representing about six per cent of the total credit; the manufacturing sector, N19.7 trillion representing approximately 21 per cent of the total credit and the services sector having N36 trillion representing 37.4 per cent of the total credit, Opara said there was a need to consider offering more credit to these key sectors and particularly the agriculture sector.

According to him, it was for this reason that the recapitalisation exercise of the CBN was a welcome development.

He said the recently announced upward review of the Minimum Capital Requirements of Nigeria by the CBN would further empower banks to extend more credit to the economy’s productive sectors.

The CIBN chief said as the country navigates the complexities of the current economic landscape, it has become increasingly evident that ensuring adequate liquidity within the banking system was fundamental to fostering sustainable economic growth and development.

Opera mentioned some of the challenges facing credit availed to the real sector today, which he said include, lack of proper structure, low adaptation to technology, the craze for foreign goods and poor infrastructure facilities, especially power and storage facilities, and poor road networks, among others.

He maintained that due to the challenges, most companies in the real sector perform sub-optimally, making them less competitive than their foreign counterparts.