Credit experts have charged government at all levels, especially, the federal government to prioritise credit management for rapid economic growth in the country.
The experts, who spoke in Lagos, said proper credit administration is synonymous to economic growth, urging relevant stakeholders in credit management to perform their responsibilities as expected of them.
The chief finance officer of Heyden Petroleum Limited, Dr. Jerry Igwilo, said there is need to strengthen credit administration and management so as to eliminate waste from the system and get both lenders and beneficiaries of credit facilities accountable, quicken economic growth.
The country, he said, though, needs to borrow more to finance its huge infrastructure development, he warned governments at all levels to desist from borrowing just to finance recurrent expenditures like salary payment.
Stating that with about 21 per cent debt ratio to GDP, Nigeria’s debt portfolio was still below debt limits, advising that the country should only borrow for capital projects which could benefit future generation.
“For us to grow our economy, for us to build the quantum of infrastructure that we require in this economy today, the country needs to borrow. But one thing that is critical and very important is that when we borrow, we must manage it well. We should not borrow to manage our recurrent expenditure, for non-capital expenditures. That is wrong. We must borrow for capital expenditure only,” he stressed.
To him, the country is good to borrow but the administration of this borrowing must be enhanced so that the goals and objectives of the borrowing are met and the country as a whole will be developed in a way that future generation will enjoy it.
He expressed worry over huge non-performing loans in the banking sector and the economy at large, blaming it on failure of professionals and the lenders to apply guiding principles of credit.
Credit administration and management, he stated, can easily be strengthened if only credit professionals adhere to the basic fundamentals of credit analysis encapsulated in the five C’s of credit, when processing customers’ loan requests.
These, he said, include; character, capacity, condition, capital and collateral, adding that, before lending money to a customer, credit managers must know who the customer is and who the guarantors are.
On her part, the managing director/chief executive officer of FITC, Lucy Newman, said the plan to entrench the use of movable assets in financing, as opposed to fixed and huge collaterals, would have a positive impact on the economy.
Stating that this is the next level of credit management, she said that it would be nice if people can aspire to acquire properties and basic living items and can present a credit report individually, to have access to credit.
Newman also said that the benefits of moving from a collateral lending to cash-flow lending is a good development, she added that collateral lending is restrictive because when someone does not have collateral, the person is automatically excluded.
“But if you go through the cash-flow lending, which will be the next level of credit and automation, you do not need to talk to anybody. You can just submit your report and it will tell if you are qualified to get credit or not within few minutes. That will be nice and given our population, that is the way to go if we really want to deal with the poverty issues. However, we have a problem, the biggest enemy for credit- discipline and commitment,” she pointed out.
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