In other to lend efficiently to Micro, Small and Medium Scale Enterprises (MSME), the Credit Bureau Association of Nigeria (CBAN), has urged financial institutions to embrace the use of credit scores, as this helps in measuring the credit worthiness of a customer in a precise and scientific way.
A credit score according to CBAN is a three-digit number that represents the level of risk that is inherent in a particular loan customer, and thus, helps a creditor or lender gauges its risk level if they are being approved for a loan or granted credit. The lower the credit scores of the customer, the higher the risk.
Tunde Popoola, chairman, CBAN who spoke at the 5th National Credit Reporting Conference of the association held in Lagos said the score will enable financial institutions in delivering faster, more consistent, unbiased and more accurate approach to retail lending.
According to him, the credit score is used for individuals alone, not corporate and summarises the total exposure of the customer with different lenders unlike the firms internal scoring system that measures the customers exposure to that particular institution alone.
He noted also, that for the country to bridge the financial gap for more than 74 per cent of Small and Medium Enterprises (SMEs), a single unique identifier must be upheld.
“The country has multiple forms of government issued identifiers for individuals including National ID, BVN, Driver’s License, Voters Card and international passport. In most countries with successful Credit Bureau infrastructure, there is always one single means of identification. Hence, Nigeria also needs to embrace a unique identifier,”
“The current situation makes data matching very tedious, cumbersome and expensive for the bureaus. This is because a bureau relies on identification of data subjects to be able to match and merge data and develop innovative products for the market,”
“We therefore urge the government to speedily implement a unique identifier for every Nigerian,”
Nigeria has moved from 37th position in 2017 to 6th in 2018, a feat he said was possible thanks to the Federal Government’s initiatives aimed at fostering the ease of doing business
“However, the credit bureau coverage remains low in Nigeria at eight per cent compared with 64 per cent in South Africa, 25 per cent in Egypt, and 17 per cent in Ghana, thus call for the need to change the narrative of credit concentration and increase access to credit,”
Also, the Director, Banking Supervision Department, Central Bank of Nigeria (CBN), Ahmed Abdulahi, said both the financial and non-financial sectors have a crucial role to play to attain more financial inclusion in the country.
He noted that Nigeria’s credit bureau industry has been promoting the use of credit information to make financial decisions, to enable businesses achieve their financial goals thus promoting financial inclusion in the country.
He added that access to credit is crucial to economic growth and has continued to be the catalyst for driving private sector development.
Minister of State for Industry, Trade and Investment, Hajiya Aisha Abubakar, added that credit information would enable Nigerian businesses particularly SMEs to thrive to create jobs.
“It would also impact positively on the Nigerian citizenry by way of identity, where Nigerians can access all financial services in the country.”
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