CONSUMER credit: 151 financial institutions express readiness to partner CREDICORP

The recently established Nigeria Consumer Credit Corporation (CREDICORP) will soon  proceed with the disbursement of consumer credit to Nigerians.

This is coming after the success of its Expression of Interest (EOI) campaign for financial institutions, as no fewer than 151 organisations indicated interest.

CREDICORP is a Federal Government corporation with a mandate to expand consumer credit access to millions of Nigerians. 

A statement on Monday said In just one month, over 151 financial institution completed the detailed EOI.

According to the statement, the institution includes commercial banks, microfinance institutions, finance companies, fintechs, mortgage banks, and cooperatives.

“Notably, 85 of these institutions are licensed by the Central Bank of Nigeria (CBN), collectively serving over 1.5 million consumer credit customers. Qualified and ready institutions are being reviewed and shortlisted for the pilot phase of the scheme,” said the statement from management of the Corporation.

It added that the eagerness of financial institutions to partner CREDICORP “highlights the strategic vision and immense benefits of targeted consumer credit under President Bola Tinubu’s Renewed Hope Agenda, on a mission to improve quality of lives, help stem corruption, and catalyse industry.”

The Managing Director/Chief Executive Officer of CREDICORP,  Mr. Uzoma Nwagba, expressed his enthusiasm saying, “The EOI remains an ongoing process and is quite detailed. We are pleased by the depth of engagements from financial institutions – especially the leading institutions of each type.

“This speaks to the excitement of financial institutions to partner with CREDICORP to receive our development finance or targeted credit guarantees. Together with our partners, we are poised to accelerate consumer credit access, ensuring that millions more Nigerians can access the financial resources and products they need to improve their lives, backed by their income.”

From a recent report released by the Corporation on the EOI’s so far, here are other notable highlights on consumer credit by the CBN-licensed institutions:

“Average Interest Rate: The participating institutions report an average interest rate of 37% per annum on their consumer credit portfolios. This strengthens CREDICORP’s resolve in designing financial products with its partners to enable lower but sustainable rates on an ongoing basis.

“Average Tenor: The institutions report an average tenor for consumer credit of 26 months, indicating a growing appetite for lending over extended periods. This contrasts with less formal lenders which may focus on shorter tenors to leverage faster turnover of capital.

“Average NPLs: The consumer credit portfolios for profitable institutions show an average NPL of 6%, while the average NPL across all other credit is 9%. The commercial banks show a reverse pattern from the average (i.e. higher NPLs on consumer credit than other credit), likely due to a wider range of options to deploy their capital (e.g. corporates) and therefore deepened focus and expertise in those.

“These findings underscore the dynamic nature of the consumer credit market in Nigeria and the need for continued innovation and support to ensure its sustainable growth. CREDICORP will proceed to review the submissions from Participating Financial Institutions (PFIs) in line with its governance and eligibility criteria – in preparation for disbursements to commence shortly.

The EOI for Financial Institutions remains open for submissions, and can be accessed at the Corporation’s website (www.credicorp.ng), the statement added.