Following the country’s low coverage of credit reporting, the Central Bank of Nigeria (CBN) has sought the collaboration of the National Identity Management Company (NIMC) and stakeholders to deepen the credit bureau market.
Despite the fact that Nigeria has one of the highest Depth-of-Credit-information index, the coverage is still very low.
Nigeria had covered 26 million people, out of a population of 170 million as at May 2014. This is from 78,189 in December 2010 and 18 million in June 2012.
Nigeria meets the World Bank’s ‘Doing Business’ measure on coverage at 5.8 percent. While the minimum requirement for the World Bank is 5 percent, OECD countries have coverage of 67.4 percent.
In terms of quality and depth of credit information, Nigeria currently meets seven out of the eight World Bank requirements, as high as OECD countries.
READ ALSO: NDIC, CBN establish new cost saving digital platform for Microfinance banks
According Luz Maria Salamina, IFC Principal Financial Analyst, Nigeria’s credit information index, which measure credit information quality, “ranks among the highest in the world, in comparable levels with that of other OECD countries”, she said at the Credit Reporting Conference in Lagos yesterday.
The coverage of the credit information, however, remains very low. This, according to Tunde Popoola, managing director CRC Credit Bureau, is a result of the low banking penetration in Nigeria.
“We want the communiqué from this conference to address how other stakeholders can come in to spread the coverage. Our coverage is still low, despite the fact that we have done very well”, says Kelvin0 Ibedo, deputy director of the banking supervision department at the CBN, who represented Godwin Emefiele,the governor of the CBN at the Second Annual Credit Reporting Conference in Lagos.
“We need to launch outside the banks to have the desired coverage,” Ibedo further said.
The collaboration is needed as the Bank Verification Number (BVN) – which the CBN, in conjunction with the Bankers Committee, introduced recently to enhance transparency in the credit administration process cannot cover all the areas, Ibedo said.
“Multiples of ID registration will greatly reduce, as the NIMC moves into harmonisation of ID numbers,” said Chris Onyemenem,director-general of the NIMC.
According to Emefiele, the reform policies of the bank have gained grip and resulted in a sound financial system. The ratio of Non-Performing Loans (NPL) to gross loans as at May 2014 stood at 4.24%, 0.76 basis points below the 5% maximum threshold set.
“We are however yet to see the dispersal in the loan portfolio, as the top 50 and 100 obligors account for 32.02% and 41.34% of the gross credit to the private sector”.
However, the credit bureaux have grappled with various challenges, notable among which, are the absence of a unique identifier, poor quality of data and low compliance levels by financial institutions.
Speaking at the occasion, Mobolanle Adesanya, chairperson, Credit Bureau Association of Nigeria, said while the positive impact of credit bureaus is already felt, yet to be felt is the widespread impact in terms of expanding credit opportunity to hundreds of thousands of small businesses and millions of consumers, and helping banks to diversify risk and contribute to GDP growth.
Hope Moses-Ashike, Yinka Abraham, Edozie Ifebi, Daniel Ojabo
