Less than 25 million Nigerians enjoy credit in past ten years -CBAN

Data released by the Credit Bureau Association of Nigeria (CBAN) has revealed that fewer than 25 million Nigerians have enjoyed credit in the last decade even as the body has expressed concerns over the dwindling credit penetration for consumers in Nigeria.

The Managing Director and Chief Executive Officer, CRC Credit Bureau, Dr. Tunde Popoola, revealed this 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”.

According to him, 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, which he said represents a 23.1 per cent increase.

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 and Popoola stressed that 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.