Credit Financing Scheme: A viable tool for uplifting standard of living in Nigeria

There is no denying the fact that Nigeria is immensely endowed as a nation with an abundance of wealth in human and natural resources and all that has to be done is to harness these resources for the benefits of the nation and its citizens.

However, this is where the rubber meets the road, because inspite of huge investments in the nation’s economy the larger segment of our population as a country are yet to enjoy the dividends and far too many of our fellow citizens still live in abject poverty, squalor and bedeviled by the scourges of unemployment, insecurity, dilapidated roads and an epileptic power supply to mention a few.

In a nutshell, under these prevailing circumstances it is tough as hell being Nigerian and living in Nigeria, unless off course you are a bandit, terrorist, politician or a corrupt bank executive also called “bankdits” no pun intended.

However, it is under this harsh economic realities in our nation that the recent announcement by the administration of President Ahmed Tinubu creating a credit financing scheme could not have come at a better time for our people and nation, because of the immense opportunity it will provide our people in terms of assess to capital, credit and improved standard of living.

The administration must be commended for seeking to implement this initiative as part of its reform’s efforts to not only improve the economy of this nation, but kickstart a robust local manufacturing and higher product demand by leveraging the benefits accruing from a large population base with assess to credit which is a huge asset and be a mega boost to the economy. The significance of a scheme like this is not in question, rather the challenge will be the implementation and the attitude and conduct of the public who will avail themselves of these financing credits once fully operational regarding timely payments and full repayments. It is a well known fact that loan repayments are very low in our nation given the enormous number of bad debts that many banks are saddled with today because of unethical conducts, lack of accountability and transparency in loan processes and a culture of corruption that has permeated our banks and society.

However, for this scheme to work and for our people to benefit from it, ethics, integrity, and transparency must be built into the process including culture change by Nigerians with due regards to personal and financial responsibilities. Nigerians must begin to understand and appreciate that if they borrow money from banks, it is their duty and responsibility to repay that loan period, because failure to repay means the next citizen cannot benefit as there will be no available funds for others avail themselves off.

Let me say here that as one who has had the opportunity to travel extensively outside of this country, that a large majority of Americans and Europeans do not have two thousand U.S. dollars or its equivalent which in Nigeria is about two million, three hundred thousand Naira in their saving accounts (N2.3m), but rely heavily on credit cards, credit financing as an integral part of living their lives.

However, for them to enjoy these facilities and for it to be self sustaining, it was built on trust, integrity, honesty and transparency and above all it is private sector driven. When credit facilities are extended the majority of recipients payback and do so on time until paid off. There are not too many defaults unless during huge economic crisis, even then defaulting is still minimal as it comes with severe financial consequences for the borrower, including higher cost of future borrowing, denial of credit and wage garnishment after creditor initiated litigations. Other consequences for defaulters include a negative report on defaulters credit profile for seven years (7yrs) and a reduced credit score, classifying the individual as potential high risk borrower which comes with a high cost to the borrower or complete denial of borrowing privileges.

Consequently, while reforms like these will ultimately lead to improved economy and living conditions for Nigerians, the implementation has to be in phases starting with people with verifiable monthly incomes like school teachers, civil servants and men and women of the security services to ensure its success.

While the full details of this credit financing scheme are not out yet, but when operational it will allow Nigerians to buy now and pay later on a monthly basis with interest until paid off. Furthermore, it will also be a huge boost to local producers like furniture makers, welding fabricators and even retailers of electronic and home appliances who will now sell more by extending credit facilities to verified potential customers.

However, while this development brings some ray of hope to our people, but for it to work and be successful the country will be well served by instituting the following:

1. Pass enabling legislation for a robust credit financing scheme that reforms any existing credit reporting agency or legislations including creating a credit bureau for reporting and credit verification purposes if none currently exist.
2. ⁠The credit scheme should be private sector driven with government providing regulatory framework for oversight in consultations with banks and other stakeholders.
3. ⁠The proposed legislation must include strict enforcement regime and tough penalties like denial of the privilege to operate an account with traditional banks or internet banks for loans or credit defaulters.
4. ⁠Streamline legislative mechanisms for wage garnishment, loss of pension’s and asset forfeitures for loan defaulters.
5. ⁠Pass national or state legislations optimizing all existing processes for acquisition of certificate of occupancy (C-of-O) and titles to landed properties and homes, so that citizens can easily secure business loans with their properties.
6. ⁠Create state/national database of all properties and ownership for verification and loan issuance purposes.
7. Deploy a secure national database of all citizens and residents in Nigeria linking BVN, NIN and international passport and making it accessible online for legitimate businesses and government agencies.
8. ⁠Enhance existing laws on impersonation, identity theft and fraud by imposing stiff penalties including 7 years jail time.
9. Pass legislation on bad debt recovery that includes sizure of assets where defaulting borrowers have interests, including personal or family properties, pensions, businesses to list a few. This law should be retroactive.

We urge policy makers to continue to solicit ideas and inputs through engagement with critics of government, citizens, civil society and frontline participants in areas of interests to help find and deploy solutions that can positively impact our nation and people. While we can pass legislations regulating behaviors, imposing high moral and ethical standards in our banking and financial sectors, it will do no good if there is no compelling threat of forceful enforcement of these laws.

We hope that as our nation continues to evolve that this government and indeed all Nigeria will come to recognize our individual and collective responsibilities for the state of the country today, directly or indirectly because for this country to fulfill its potential every citizen irrespective of his or her place must abide by our laws, and as a society insist on accountability, and restitution as a public policy. Let’s say no to “Oga Abeg” and insist that law breakers take responsibility for their actions pay the price to make our country great.

Osaikhuiwu is a U.S- based service delivery manager, a certified project manager, with expertise in process improvement, change management and elimination of waste, fraud and abuse.