Expert Faults Nigeria’s Credit System As Borrowers Pay More For Invisible Trust

Nigeria’s credit system may be unfairly penalising millions of financially disciplined borrowers as weak data-sharing practices among lenders continue to distort risk assessment and push up borrowing costs.

According to industry analysts, despite regulatory frameworks aimed at improving transparency, experts say many financial institutions still rely on fragmented customer records, forcing borrowers to rebuild trust with every new lender, regardless of their repayment history.

This has raised fresh concerns over the effectiveness of Nigeria’s credit reporting system at a time the country is pushing deeper financial inclusion and wider access to consumer credit.

Speaking in Lagos, Founder and chief executive officer of Mathesis Analytics, Winston Osuchukwu, said the current system remains trapped in institutional silos that fail to reflect the full picture of an individual’s financial behaviour.

“For decades, credit risk assessment in Nigeria has rested on an incomplete foundation. Lenders price credit largely based on data they alone have collected about a borrower. This institutional insularity is often deliberate, and it costs the Nigerian borrower dearly,” he said.

Osuchukwu introduced the concept of Personal Equity, describing it as a possible solution to the country’s fragmented credit architecture.

“Personal Equity is the quantified expression of an individual’s financial behaviour, aggregated across every institution with which they have transacted and translated into a precise, portable measure of creditworthiness.

It is, in essence, a person’s credit identity—not as a single lender perceives it, but as the full breadth of their financial life reflects it,” he said.

According to him, borrowers who consistently repay loans, save through fintech platforms or maintain good transaction records often remain “invisible” to new lenders because such behavioural data is poorly shared.

“Each new relationship begins from near-zero, and the borrower is priced accordingly, not because they are risky, but because their risk is unmeasured,” he stated.

He argued that although the Credit Reporting Act and the Central Bank of Nigeria’s credit bureau framework were designed to close this gap, selective compliance has weakened the system, with lenders sharing negative records more consistently than positive behavioural data.

This, he noted, creates what he described as “information poverty,” leaving many borrowers undervalued, overcharged, or excluded from credit they qualify for.

Osuchukwu warned that the gap poses a wider threat to Nigeria’s financial inclusion agenda, where access to affordable credit remains a critical challenge for households and small businesses.

He, however, said the Nigeria Data Protection Act (NDPA) 2023 could help reshape the system by reinforcing that financial behavioural data belongs to the individual, not the institution.

“The data exists. The technology exists. What remains is the collective will to deploy it,” he said.

Consequently, the analysts say that as Nigeria’s consumer credit market expands, stronger enforcement of data-sharing obligations and open banking standards will be critical to building a system in which trust follows the borrower—not just the bank.