Following the successful completion of its recent Expression of Interest (EOI) campaign, the Nigeria Consumer Credit Corporation (CREDICORP) is set to commence the disbursement of consumer credit to Nigerians. The federal government entity, established to expand consumer credit access across the country, has attracted interest from 151 financial institutions eager to participate in this initiative.
Over the course of one month, a variety of financial institutions, including commercial banks, microfinance banks, fintech companies, mortgage banks, and cooperatives, have completed the detailed EOI process. Of these institutions, 85 are licensed by the Central Bank of Nigeria (CBN) and collectively serve over 1.5 million consumer credit customers. CREDICORP is currently reviewing and shortlisting qualified institutions for the pilot phase of the scheme.
The high level of interest from financial institutions underscores the strategic vision and potential benefits of targeted consumer credit under President Bola Tinubu’s Renewed Hope Agenda.
Mr. Uzoma Nwagba, Managing Director of CREDICORP, expressed his enthusiasm about the progress, stating, “The EOI remains an ongoing process and is quite detailed. We are pleased by the depth of engagements from financial institutions – especially the leading institutions of each type. This speaks to the excitement of financial institutions to partner with CREDICORP to receive our development finance or targeted credit guarantees. Together with our partners, we are poised to accelerate consumer credit access, ensuring that millions more Nigerians can access the financial resources and products they need to improve their lives, backed by their income.”
A recent report by CREDICORP highlighted several key findings from the EOI submissions, including:
– Average Interest Rate: Participating institutions report an average interest rate of 37% per annum on their consumer credit portfolios. CREDICORP aims to collaborate with partners to develop financial products that offer lower, yet sustainable, rates.
– Average Tenor: The average loan tenor is 26 months, reflecting a growing preference for extended lending periods, as opposed to shorter tenors often used by less formal lenders.
– Average Non-Performing Loans (NPLs): Profitable institutions report an average NPL of 6% on consumer credit portfolios, compared to 9% across other types of credit. Interestingly, commercial banks show a higher NPL rate on consumer credit compared to other credit, possibly due to a broader range of capital deployment options, such as corporate loans.
These insights emphasize the dynamic and evolving nature of the consumer credit market in Nigeria and highlight the need for continued innovation and support to ensure sustainable growth. CREDICORP will continue to review submissions from Participating Financial Institutions (PFIs) to meet governance and eligibility criteria, with disbursements expected to begin shortly.
