Consumer lending remains a largely untapped segment of Nigeria’s financial sector. Its insignificance is evident in the lack of data tracking consumer lending as a percentage of GDP. In contrast, advanced economies such as the U.S. (73 percent), Canada (103 percent), the UK (78 percent), and France (63 percent) have well-developed consumer lending markets.
In a conversation with Deji Olowe, CEO of Lendsqr, a loan management systems provider in Nigeria, he shares insights on the potential impact of improved consumer lending systems. He envisions a future where Lendsqr transforms Nigeria’s credit landscape—just as YouTube enabled the rise of countless media companies, Lendsqr aims to empower the creation of lending companies.
Olowe, a frontier in the Nigerian digital banking space serves as the board chairman of Paystack. He is also a leading advocate for open banking in Nigeria, playing a key role as a trustee of the Open Banking Nigeria society.
How would you describe the state of consumer lending in Nigeria?
Consumer lending in Nigeria is still a long way off, meaning it’s super underdeveloped. I don’t think we’re tapping up to 1% of its potential, and it’s bad for different reasons. First, people who need credit have no access to it. Then, those who are willing to lend struggle to get their money back. Also, the macroeconomic environment does not support it.
Essentially, inflation is very high, which means the cost of funds is high, and in turn, interest rates are high. On the other side, the rule of law is weak. There are no strict consequences for not repaying loans, so lenders have no real protection.
So, during the days of Tunde Irukhera as FCCPC CEO, there was more protection for the borrowers, but we had respectful debates on the issue. I maintain that the agency has to strike a balance. While FCCPC protect borrowers, it should be within the context of them doing the right thing, it shouldn’t encourage irresponsible borrowing.
In your opinion, is the state of consumer credit bad?
Yes, but it has so much potential that the problems are worth fixing. If you fix it well, it will explode in a good way. It will drive massive economic growth.
If Nigeria can unlock credit systems, it will unlock consumption. Consumption will drive supply. Supply will drive production. Production will drive salaries, taxes, and everything else. It makes sense for the government to prioritize making consumer credit work.
What are the biggest challenges facing consumer lenders today?
The biggest challenge is a lack of protection. There’s no effective enforcement for loan repayment. Lenders have no structured way to ensure they get their money back.
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The solutions are two-pronged. First, enforce the laws, then build industry structures and technology to ensure lenders can recover their money. Open banking will help with this by allowing lenders access to correct, clean data and enabling automated loan repayments.
What role does technology play in solving these issues?
Technology makes lending scalable. Think about it—without technology, Uber wouldn’t exist.
Uber makes sure passengers feel safe. If bad actors infiltrate, Uber blocks them. That’s why people trust the platform. Without its technology, kidnappings would make ride-hailing unsafe.
Similarly, loan management technology can filter out bad borrowers and ensure repayments. That’s what we’re doing with Lendsqr, building the best loan management system in the world. Right now, our software is powerful but a bit complex. This year, we’re working to simplify it so that anyone can use it, even without lending experience.
What kind of solutions does LendSqr offer?
We’re building a lending platform that anyone can use. You shouldn’t need to be an expert to run a lending business.
Think about YouTube. In the past, running a TV station required years of training. Now, a 9-year-old can shoot a video on their phone, edit it with CapCut, and upload it to YouTube.
We’re doing the same thing for lending, making it so simple that even a 13-year-old could use it to lend money to their friends.
Borrowing happens everywhere. The question is: how do you track it? How do you get repaid? We want to make that process seamless.
Let’s talk about credit risk assessment. Do we have a functioning credit scoring system in Nigeria?
Yes, but most people don’t use it properly. There’s a difference between credit history and credit score:
Credit history records all loans a person has taken and whether they repaid them. Credit score analyzes that history (plus other factors) to generate a score that predicts a borrower’s reliability.
Lenders use this score to decide loan terms. For example, A high credit score might qualify someone for ₦10 million over 24 months. An average score might mean ₦5 million over 12 months. A low score? Maybe ₦100,000 for two months.
Each lender sets their risk thresholds.
Tell us about your work with open banking in Nigeria.
I founded Open Banking in Nigeria. Essentially, it is a financial innovation that allows banks and financial institutions to securely share customer data with third-party providers through APIs.
I started working on open banking about eight years ago.
If you look at the modern financial services in Nigeria, they rest on a few key pillars—BVN for identity, interbank transfers for liquidity, and payments infrastructure. Open banking will be the next major transformation.
How about concerns around data privacy?
That’s where regulation comes in. The National Data Protection Commission has good regulations, but enforcement is weak. If regulations aren’t enforced, they’re meaningless. Even the Bible says, a living dog is better than a dead lion. If you have strong regulations but no enforcement, what’s the point?
