With the recent achievement of the Expression of Interest (EOI) campaign for financial institutions, the recently established Consumer Credit Corporation of Nigeria (CREDICORP) has seen 151 organizations express interest and will soon begin disbursing consumer loans to Nigerians.
CREDICORP is a Federal Government agency with a mission to expand access to consumer finance for Nigerians. Within a month, a number of financial institutions including commercial banks, microfinance banks, fintechs, mortgage banks, and cooperatives have completed detailed EOIs.
Notably, 85 of these institutions are licensed by the Central Bank of Nigeria (CBN) and collectively serve over 1.5 million consumer finance customers.
According to the company, eligible and motivated institutions will be screened and shortlisted for the pilot phase of the programme. The willingness of financial institutions to partner with CREDICORP underscores the strategic vision and immense benefits of targeted consumer financing under President Bola Tinubu’s Renewed Hope Agenda.
CREDICORP Managing Director, Uzoma Nwagba expressed his excitement 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.”
Here are some other key highlights on consumer loans by CBN-licensed institutions from the recent EOI report issued by the company:
Average interest rates: Participating institutions reported an average interest rate of 37% per annum on their consumer loan portfolio. This reinforces CREDICORP’s determination to co-develop with partners’ financial products that enable permanently low and sustainable interest rates.
Average term: Financial institutions report an average term for consumer loans of 26 months, indicating an increase in demand for loans over longer periods. This contrasts with less formal lenders who focus on shorter terms to achieve faster capital turnover.
Average non-performing loans: Profitable financial institutions have an average non-performing loan of 6% in their consumer loan portfolios, compared to an average non-performing loan of 9% for all other loans. Commercial banks show an inverse pattern to the average (i.e., higher non-performing loans for consumer loans than other loans). This is probably due to their broader capital utilization options (e.g., corporates), which allow them to focus on these areas and place greater emphasis on expertise in the region.
These findings highlight the dynamism of Nigeria’s consumer credit market and the need for continued innovation and support to ensure its sustainable growth. CREDICORP will be reviewing Participating Financial Institutions (PFIs) applications in line with governance and eligibility criteria in preparation for disbursements to commence soon.
