In 2005, the Central Bank of Nigeria (CBN) launched a microfinance policy to provide poor and economically vibrant Nigerians with access to credit services, intending to reduce the country’s overall level of poverty. To supplement this initiative, Private Credit Bureaus were established in 2008 to facilitate access to credit for low-income individuals and micro, small, and medium-sized businesses, with a target of $5.1 billion in three years. However, things have not changed much, with credit bureau penetration remaining at 4.9 percent of the adult population in 2014. Furthermore, only about one-third of the country’s MSMEs have successfully obtained a loan from a financial institution according to the Central Bank of Nigeria’s IFC Credit Crunch Report. Instead, most people fund their businesses with personal savings or profits reinvested. According to the EFInA Access to Financial Services in Nigeria Survey 2018, only 25.9 percent (25 million) of adults borrowed money in the previous 12 months, with 22 percent (21 million) borrowing from informal sources such as family and friends and only 1.3 percent borrowing from banks. The country’s credit deficit has been blamed on a variety of factors, including a lack of information on available credit sources, lower levels of income, insufficient collateral, and high-interest rates.
Nigeria will be one of the 25 priority countries in the World Bank Group’s Universal Financial Access 2020 initiatives, to extend access to financial services to all adults by 2020. However, little has changed since this declaration, as both individuals and small businesses continue to face difficulties in obtaining credit due to a lack of required collateral, high-interest rates, and a lengthy documentation process. Although evidence shows that, most small-scale businesses did not apply for loans because they believed that these obstacles would hinder their application. This furthered the perception that credit is not readily available to households with few or no assets and that financial institutions will not lend to them, so they are more likely to borrow from informal sources such as family and friends for household or business needs.
CredBooth, a financial technology company vows to support the existing efforts from various stakeholders in addressing lingering access to credit issues in Nigeria. CredBooth offers affordable instant digital credit to individuals and businesses with/without collateral. The company utilises psychometry, machine learning and digital forensics data analysis for credit scoring and assessment to provide direct personal and business loans to individuals and MSMEs without credit information all over Nigeria using digital platform. CredBooth also plans to leverage financial services agents to make their services available to low-income segment without access to digital channels.
You can access these services through CredBooth’s mobile App or www.credbooth.com . Download the mobile App via google playstore or Apple store to get started.
