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Credit Bureaux Responsible for Decline In NPL, Boosts Lending

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 The managing director/chief executive officer, CRC Credit Bureau, Mr. ‘Tunde Popoola, has said the operation of the credit bureaus and credit rating agencies played a significant role in bringing down the level of non-performing loans in Nigeria.

Speaking at the Bimonthly Forum of Finance Correspondents Association of Nigeria (FICAN), Popoola said it has boosted access to loan to the Nigerian private sector by more than 100 per cent in the past 10 years.

He added that the emergence of credit bureaus have reduced the level non-performing loans in the Nigerian banking industry from 32.8 per cent in 2009 to 9.3 per cent in 2019.

At the forum themed: ‘Stimulating Economic Growth Through Improved Access to Credit, Popoola said, “Nigeria licenced three private credit bureaus in 2009 and their impacts on the volume of loans and reduction in the rate of non-performing loans (NPLs) have been remarkable.

“Loans to the private sector rose from N7.7 trillion in 2008 to over N12 trillion in 2015 and N16 trillion in 2019. Special credit products for Small and Medium Enterprises (SMEs) and the introduction of credit cards became possible with the advent of credit bureaus.

“Furthermore, NPL ratios declined significantly from about 32.8 per cent in 2009 to a single digit of 9.3 per cent as at June 2019. The healthy loan portfolios were made possible, among other factors, by the presence of private credit bureaus and the establishment of the Asset Management Corporation of Nigeria (AMCON).”

He also said that the CRC Credit Bureau has improved access to credit for consumers and Micro, Small and Medium Enterprises (MSMEs). “When CRC commenced live operations in 2009, it had only six commercial banks which invariably successfully submitted credit records.

“Today, CRC has about 1,500 institutions with over 33 million credit records successfully processed. In effect, over 1,500 corporate entities use the services of the company, cutting across all types of financial institutions, insurance companies, telecommunications (telcos), electricity distribution (discos), cooperative societies, pharmaceuticals, retailers, conglomerates, travel and hospitality businesses etc,” he said.

He added that the CRC Credit Bureau is the largest credit reporting agency in Nigeria, responsible for over 95 per cent of the nation’s recorded credit data. He also emphasised that access to SMEs remained pivotal to the economic growth of the country as the SMEs are the largest contributors to Nigeria’s GDP.

He said: “The challenge of access to credit confront consumers and SMEs much more than the large enterprises. Large firms have easy access to credit. But to stimulate economic growth, reduce poverty and engender prosperity, there must be significant improvement in access to credit and other forms of finance for consumers and SMEs.”

“It is instructive to note that government interventions through grants, subsidies and other special arrangements and incentives will help, but they cannot unleash the required exponential access required to stimulate economic growth. The focus has to be more on policies and programmes that provoke market-driven initiatives.”

“This will only be addressing the issues constituting bottlenecks and militating against free flow of credit to consumers and SMEs.

However, the journey towards improved access to credit especially for consumers and SMEs has been helped with the establishment of credit bureaus, collateral registry and digitisation. It can only get better.”

The situation today is different from what it used to be several years ago. Significant improvement in access to credit is being experienced. New players are also coming into the system especially those that can be classified as shadow banks, mostly fintechs, money lenders and telcos.

“They process loans with speed. This phenomenon has influenced most of the commercial banks to also change their lending model, embrace technology and build the capacity of their personnel to enable them service consumers with low value loans.

“As technology is assisting in addressing the challenge of financial inclusion, it will rub off on lending and improve access to credit for consumers and small businesses.” He further added: “There is no doubt that the ease of access to credit for consumers is more visible now than ever. And it can only get better.”

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