The senior partner, Punuka Attorneys and Solicitors, Anthony Idigbe, SAN has said that the growth of Nigeria’s Gross Domestic Product (GDP), will require wider access to credit and a regulated environment for credit reporting.
Idigbe said this at the just concluded conference of Western Attorneys-General (CWAG) and African Alliance Partnership (AAP) at the Lagos Business School in Lagos. The event, which was held in collaboration with the Central Bureau Association of Nigeria (CBAN) was geared towards improving access to credit in order to grow Nigeria’s GDP.
The founder of Credit Registry, Taiwo Ayedun who also spoke at the event, said that there was need for increased access to credit for the economy to grow.
Ayedun who said this during a special session on Credit Reporting organised by the Credit Bureau Association of Nigeria (CBAN), Conference of Western Attorney General (CWAG) and African Alliance Partnership (AAP) in collaboration with the Lagos Business School in Lagos, noted that good credit reporting and scoring behaviour would aide consumer lending which has direct impact on the GDP and economic growth.
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“The US GDP is about $19 trillion,” he noted. “And research shows that mortgage and consumer spending concluded 67 per cent of the US GDP. A lot of this consumer and mortgage spending is based on the credit given by American banks. So it makes sense that if Nigeria is going to increase its GDP, it would have to help the banks give more credit to Nigerians.”
Ayedun continued, “According to a 2017 survey, global credit coverage around the world shows that North America, Canada, United States, Germany, the United Kingdom and Ireland are 100% covered, while Nigeria has only about 7.8 per cent coverage. However, what this proves that a society where trust is well established, there is more commerce going on.”
In his views, more credit flow to consumers and small businesses, will see increased economic activities and the quantum of these business transactions will lead to more productivity.
“So a consumer that has an average job if they can access credit, they would spend more and when they spend more, it enhances economic activities and the producers would have to increase production to meet the demand and ultimately leads to employment generation,” Ayedun said.
On challenges hindering credit in Nigeria, he said interest rates are a major interference to the growth of credit in Nigeria.
A representative of the Central Bank of Nigeria (CBN) who was at the workshop, called for a downward review of interest rates, which according to him would substantially increase access to credit.
He said, “One of the things I think would help individuals and small businesses to take loans is an affordable interest rate because if you take loans at a very high interest rate it makes it difficult to pay back.”
“Also one of the things lenders are not using banks are not yet using data analytics to make decisions yet, they still treat everyone the same way despite the fact that there are credit scores. This is a major challenge that needs to be addressed and banks need to build capacity internally to be able to do consumer credit on a very large scale.
He also maintained that with an increase in credit, policy makers need to ensure these credits are not mostly given to business owners and consumers for import purposes, as this would ultimately defeat the purpose, i.e. GDP growth.
THEODORA KIO-LAWSON
