The Nigerian authorities has moved to undertake a unified nationwide credit score system that hyperlinks people’ credit score rating to their Nationwide Identification Numbers (NIN), to allow monetary establishments to entry complete and traceable credit score profiles of shoppers looking for loans.
This was introduced by Uzoma Nwagba, Managing Director of the Nigerian Shopper Credit score Company (CREDICORP) throughout a press engagement on the State Home in Abuja, on Tuesday, June 17.
He said that every one monetary establishments together with banks, fintechs, and microfinance are to report residents’ credit score historical past, together with mortgage reimbursement, linked to their NIN. Nwagba added that the transfer will remodel credit score accessibility by encouraging inclusive and accountable borrowing, and reward monetary self-discipline.
“It is a basic shift in how credit score works in Nigeria. Your NIN will now function the anchor to your credit score profile. Whether or not you borrowed from a business financial institution, a microfinance establishment, or a digital lender, that knowledge will now be traceable and carry actual penalties,” Nwagba stated. “In the event you default in your mortgage, it might have an effect on your skill to resume your passport, your driver’s license, and even hire a home. There might be no hiding place.”
Monetary establishments have various elements for assessing creditworthiness of shoppers. Conventional banks depend on rule-based scoring utilizing turnover thresholds and BVN-linked credit score histories (accessible by way of the Central Financial institution’s credit score test software program) to guage creditworthiness of company entities or prospects with structured revenue, principally excluding common prospects attributable to high-risk of default. Fintechs leverage algorithms and digital footprints, principally smartphone knowledge to evaluate credit score rating, however typically cost larger rates of interest to offset the chance of mortgage defaults.
The proposed NIN-linked system will operate as a centralised credit score bureau, open to all monetary establishments and key authorities companies, which means credit score behaviour might additionally affect entry to non-financial companies like passports and housing, in keeping with Nwagba.
Whereas the federal government’s new system might increase banks’ willingness to increase credit to common prospects, it is also a win for fintechs as credit score reporting will now be extra clear and consequence-flagged.
Nwagba urged monetary establishments to decide to the nationwide credit score framework to shut the nation’s credit score hole estimated at ₦183 trillion, which additionally requires personal sector participation.
“With the proper infrastructure and transparency, lenders might be extra assured, rates of interest will drop, and Nigerians will lastly have entry to reasonably priced credit score,” Nwagba stated.
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