The Credit Bureau Association of Nigeria (CBAN), has expressed concerns over the dwindling credit penetration for consumers in Nigeria, even as data released by credit bureaus show that fewer than 25 million Nigerians have enjoyed credit in the last decade.
The Managing Director and Chief Executive Officer, CRC Credit Bureau, Dr. Tunde Popoola, at a webinar organised in collaboration with the Lagos Chamber of Commerce and Industry (LCCI), tagged: “Exploring access to finance opportunities in a pandemic world,” said although credit disbursed by Nigerian banks to the private sector was N8.06 trillion as of December 2009, it grew to N26.69 trillion as at December 2019.
He said consumers and Micro Small and Medium Enterprises (MSMEs), had been experiencing constraints in accessing finance, compared with large firms pre-COVID-19, thereby making it difficult for consumers and MSMEs to access finance from formal financial institutions because they are perceived to have higher risks.
“Credit bureau coverage by 2020 is 14 per cent according to the World Bank’s ease of doing business report. More consumers will lose the opportunity of access to credit now with COVID-19 due to loss of job and other economic opportunities,” he added.
He noted that for MSMEs that constitute over 96 per cent of businesses in Nigeria, CBN statistics for 2018 indicated that small businesses accounted for less than one per cent of total commercial banking credit. Also, fewer than two million firms had obtained credit out of the recorded 41.5 million businesses registered by Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), in 2019.
According to the National Bureau of Statistics (NBS), less than five per cent of SMEs have been able to access adequate finance for working capital, and for funding business growth and expansion.
Popoola said access to finance has been identified as one of the major challenges that MSMEs face even before the pandemic.
He however, noted that running a profitable and thriving business in the current economic realities would go beyond money and factor in other variables such as technology and training that can assist business owners to achieve their business goals.
He recommended that accessing loans from commercial entities should be just one of the many resources that MSMEs need moving forward, while MSMEs need to seek support beyond finance, and take advantage of all the resources made available from both public and private entities.
He said the ongoing global pandemic has triggered an economic downturn for both developing and developed economies around the world, saying that Nigerian business owners are facing more difficulties with the increase in fuel and electricity tariffs in recent times.
Also speaking, Ag. Managing Director, FirstCentral Credit Bureau, Oladimeji Peters, urged MSMEs to get their acts together by ensuring they run a good credit history, saying the banks are only open to credible consumers with good credit history.
The Managing Director and Chief Executive Officer, CreditRegistry, Mrs. Jameelah Sharrieff – Ayedun, said the need to meet financial obligations has never been so important, maintaining that credit bureaus now support lenders and creditors to take decisions with facts.
She added that those with good credit histories will continue to enjoy unhindered access to formal credit, while those who do not have would continue to struggle.
