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Tag: consumer credit scheme

  • Fed Govt kicks off N100bn consumer credit scheme

    Fed Govt kicks off N100bn consumer credit scheme

    …starts with 500,000 Civil Servants

    The federal government has moved to enhance access to consumer credit across Nigeria by releasing N100 billion in funding to the Nigerian Consumer Credit Corporation (CREDICORP).

    The financial injection marks the beginning of a nationwide consumer credit scheme aimed at economically active Nigerians, starting with 500,000 civil servants.

    According to Uzoma Nwagba, CEO of CREDICORP, “the funding has been received”, and the disbursement process is set to begin imminently.

    “The bottom line is that this programme is about to start, and it will happen this week or latest on Monday next week,” Nwagba stated in an exclusive interview with The Nation in Abuja.

    He further stated that the scheme’s implementation will be carried out through participating financial institutions (PFIs), which will manage the credit distribution rather than CREDICORP directly engaging with individual customers.

    The first phase of this initiative will see 15,000 civil servants being credited in each round, continuing until the target of 500,000 civil servants is reached.

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    After this initial phase, the scheme will be extended to include other eligible members of the public, broadening its impact on Nigeria’s economy.

    In a press release issued in Abuja, CREDICORP announced that the disbursement of consumer credit to economically active Nigerians had officially commenced through its network of PFIs.

    Among the first wave of institutions involved is Credit Direct, Nigeria’s largest lender to civil servants and a subsidiary of the FCMB Group. This partnership aims to accelerate access to consumer credit, particularly for civil servants nationwide.

    Starting in early September, civil servants on the Integrated Payroll and Personnel Information System (IPPIS) will benefit from exclusive offers, including reduced interest rates and flexible repayment plans.

    These offers are designed to help them purchase essential domestic goods, mobility solutions, medical care, electronics, and other household needs.

    Uzoma Nwagba expressed enthusiasm about the launch, noting that the initiative aligns with President Bola Tinubu’s commitment to improving the well-being of Nigerians.

    “We are excited to partner with Credit Direct to kick off President Tinubu’s consumer credit scheme with civil servants, as Mr. President had promised,” Nwagba said.

    He added that through this partnership, civil servants could access instant and affordable credit, which would help them manage economic challenges and improve their quality of life.

    The broader goal of the CREDICORP initiative is to expand consumer credit access to 50 percent of economically active Nigerians by 2030.

    The scheme’s design, which mirrors the model used by the Development Bank of Nigeria (DBN), involves providing wholesale capital or credit guarantees to PFIs, ensuring a structured and efficient rollout of the programme.

    Key features of the credit offer include some of the lowest interest rates in the market, starting from September 3, 2024.

    Civil servants will have the opportunity to access loans of up to N3.5 million, depending on their income and needs.

    Additionally, the scheme offers flexible repayment plans tailored to the unique circumstances of each borrower, alongside a quick and easy application process to facilitate fast access to funds.

    The importance of consumer credit in modern economies cannot be overstated, as it enables citizens to make crucial purchases, such as homes, vehicles, education, and healthcare while repaying responsibly over time.

    President Tinubu earlier in the year endorsed the scheme, noting that consumer credit is vital for achieving social mobility and improving the standard of living for hardworking Nigerians.

    By building credit histories through responsible repayment, individuals unlock more opportunities for a better life, while the increased demand for goods and services stimulates local industries and creates jobs.

    As the scheme takes off, civil servants and other eligible Nigerians are encouraged to visit the Credit Direct website or contact their customer service centre for more information about the special credit offers and eligibility criteria.

    This initiative marks a significant milestone in the Federal Government’s efforts to boost economic stability and enhance the quality of life for millions of Nigerians.

  • 14 banks key into Consumer Credit Scheme

    14 banks key into Consumer Credit Scheme

    • N200b set aside

    • Over 1.5m applicants pass financial inclusion test

    More financial institutions have bought into the Consumer Credit scheme, The Nation learnt yesterday.

    The Federal Government introduced the scheme under the Consumer Credit Corporation (CREDICORP) to remove structural, market and policy barriers and accelerate access to consumer credit.

    The target is to have 50 per cent of all working Nigerians on the schemes net by 2030.

    Investigation by this newspaper shows that the number of commercial banks that have shown interest has risen from six to 14.

    Besides, eight out of nine microfinance banks with national spread have expressed interest in partnering with the Corporation.

    The pilot phase of the consumer credit financing scheme is expected to feature a significant number of microfinance banks (MfBs and fintech companies.

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    Available data indicates these institutions have a large portfolio of active consumer credit customers, making them pivotal in the scheme’s implementation.

    CREDICORP Managing Director/Chief Executive Officer (MD/CEO) Uzoma Nwagba acknowledged the crucial role of non-commercial banks in the consumer credit market.

    He noted increased activity from MfBs, finance houses, and fintechs.

    Nwagba said: “Commercial banks are very active participants for sure; we also see that the consumer credit space is not dominated by commercial banks, as is the case in corporate lending.

    “We also see a lot of consumer lending from the universe of microfinance banks and finance houses, including FinTechs.”

    The federal government is committing N200 billion to expand consumer credit access.

    “This funding will be provided to institutions in the form of wholesale capital or credit guarantees, ensuring these institutions have the necessary resources to lend to consumers. Nwagba told our reporter.

    He added: “The government is actually putting its money out as wholesale capital at concessionary rates or credit guarantees.

    “Wholesale capital involves financial institutions borrowing from CREDICORP and repaying the loans. In contrast, credit guarantees mean the government will share the risk with the lending institutions.

    “If people don’t pay you back, we will share the risk partially with you.”

    On the interest rates to be charged, Nwagba said: “It can’t be one interest rate, but it will be cheaper than the ones they will have access to normally.

    “It depends on the financial institutions and what product they are borrowing for, as well as the risk level of the borrower.”

    He assured that the affordable capital provided to financial institutions would benefit consumers.

    “Because the capital is cheap to the financial institutions already, they will pass on the proceeds to the consumer, and it’s going to be cheaper than they would normally get from the market,” Nwagba explained

    The registration process for financial institutions involves providing detailed information about their current consumer credit portfolio.

    He said: “When you ask the financial institutions to register information expressing interest, you also get information about the current size of their consumer credit portfolio per annum, how many customers they served in 2023, and evidence of that outside of us because you are also trying to assess their current operation and scale.

    “Already, there are well over 1.5 million consumers that CreditCorp can confirm from the books of the financial institutions.”

  • Consumer Credit Scheme: Matters arising

    Consumer Credit Scheme: Matters arising

    By Olusuyi Adaramewa

    As part of the Renewed Hope agenda of President Bola Ahmed Tinubu’s (PBAT) administration, the birth of the Consumer Credit Scheme /Corporation signals yet another landmark – a colour amber, in its key performance indicators.  In concretizing the initiative, a N100billion (about USD85m) has been earmarked for the take-off of the first phase of the scheme slated for May 15.  Going by reports, the phase one would kick off with the Civil Service on that day. Thereafter, its cascading effect shall be felt by other segments of the Nigerian public.

    Methinks that this developmental stride outweighs a mere actualization of political slogan or a mere appeasement of the Breton Woods or multi-lateral agencies often labelled as being surreptitiously moulding our present socio-economic reconfiguration. If anything, the bottom line is that it appears to be a right step in the right direction. This becomes obvious given the fact that it may unlock credit opportunities and their potentials in the system, thereby alleviating some challenges attached to the perennial paucity of funds in the economy.

    One of the key challenges of a consumer credit scheme in an emerging economy like ours is the issue of financial inclusion. How far have we addressed this in Nigeria? Without mincing words, and but for the few noticeable hiccups, we are bound to be gleeful over the mirthful episodes that have characterized the payment system landscape within the last one decade or so. Put clearly, the Nigerian payment system has been rejuvenated and transformed to the extent that more people have been included in its ecosystem. Based on the results of the EFInA Access to Financial Services in Nigeria 2012 survey, “34.9 million adults representing 39.7% of the adult population were financially excluded. Only 28.6 million adults were banked, representing 32.5% of the adult population.” 

    Read Also: Consumer Credit Scheme: Credit Corp warns against fraudsters

    Gratifyingly, and according to the World Bank, the financial inclusion rate has risen to about 64 per cent of the eligible populace in 2024. This signals that around 64 percent of the adult population in the country has access to financial services such as bank accounts, loans, investments, and digital payments. The Guardian of Wednesday, May 8, presented an impressive growth trajectory in the  values of electronic payments in Nigeria , for the past eight years: “2016 N62trillion, 2017 N83trillion, 2018 N109trillion, 2019 N150trillion, 2020 N356trillion, 2021 N272trillion, 2022 N387trillion, and 2023 N600trillion.”

    Despite this upbeat, there are still some challenges with infrastructure, making it excruciating for the average Nigerian to seamlessly cash in and out, via the electronic channels. For instance, power has remained elusive, while other supporting infrastructural facilities have been in comatose. Security is equally a challenge that shakes the entire financial system to its foundation. Robbery, kidnapping, vandalism and other terrorism related vices make their inroads into the system daily and further challenge the development of the financial system.

    It must be noted, however, that many individuals in the country, still lack access to formal financial services, which can limit their ability to invest in education, start businesses, or deal with unexpected expenses. Where there seems to be some succour to bridge the credit gaps, the cost of borrowing is extremely high, sometimes more than 30 per cent. As if that is not sufficient, the conditions attached are stringent and somewhat unattainable. Expectedly, therefore, by providing access to credit via consumer credit scheme, it may help bridge this gap and empower individuals to improve their quality of life.

    It bears stating that the credit consumer system requires a robust financial infrastructure, including but not limited to credit reporting systems and consumer protection laws, to prevent consumers from falling into debt traps.  Indeed, we can borrow a leaf from the Financial Conduct Authority (FCA) of the UK in order to regulate the scheme.

    In the UK, effective April 1, 2014, responsibility for regulating consumer credit passed to the Financial Conduct Authority (FCA). The “FCA supervises the conduct of over 50,000 firms, and regulates the prudential standards of those firms which are not regulated by the Prudential Regulation Authority (PRA)”.

    By the same token, “the PRA regulates around 1,700 of the largest financial firms including banks, building societies and major investment firms. The FCA has an over-arching strategic objective to ensure that the financial markets it regulates function well.”

    The question is: whither Nigeria? What system or institutional framework have we put in place to regulate the scheme?

    Closely related to this is the fact that there exists the challenge of credit risk and loan delinquency. In Nigeria today, there is paucity of data as well as reliability of the existing ones. Save for the operations of the Credit Bureau Association of Nigeria (CBAN) which was set up in 2012 by the three licensed Credit Bureaux in Nigeria (CRC Credit Bureau Ltd, CR Services Credit Bureau Plc, and XDS Credit Bureau Ltd) to promote the development and use of credit reporting in Nigeria, this would have remained tedious. This and other related issues like the lack of a robust or established credit histories and financial literacy among consumers can increase the risk of default on loans. If not properly addressed, it may lead to higher interest rates, which can further strain the financial stability of the vulnerable individuals.

    Thus, implementing risk assessment tools, such as credit scoring models and collateral requirements, by appropriate institutions concerned can help mitigate these risks and ensure the sustainability of the consumer credit scheme.

    Nonetheless, a well-designed consumer credit scheme can stimulate economic growth and promote financial stability in an emerging economy like ours. It goes without saying, that by providing individuals with access to credit, they can invest in assets, improve their living standards, and contribute to the overall economic development of their communities. This is expected to stem the tide of corruption among the civil servants as they do not need to primitively amass cash in order to own basic necessities of life.  Once, they are credit worthy, this singular goodwill will speak for them and “open doors” in accessing credits in the acquisition of their daily needs.

    Additionally, Consumer Credit Scheme, if operationalized in conjunction with other monetary policy tools such as the recent hike in the monetary policy rate (MPR), can also encourage savings and financial discipline among borrowers, leading to increased financial literacy and better money management practices.

    Going further, consumer credit scheme can foster innovation and entrepreneurship by supporting micro, small and medium enterprises (MSMEs) among others.  It must be noted that by providing entrepreneurs with the necessary capital to launch their ventures, the scheme can create a conducive environment for job creation and economic growth. It may also accentuate the appetites of the consumers, stimulate consumer spending, which can boost demand for goods and services and drive economic expansion. 

    In optimizing the full advantage of this development, we need to avoid being bogged down by the sole consumption of foreign goods and services. This sounds a tall order, but it can be consciously and concertedly attained by ensuring that we place high premiums on the production and provision of locally manufactured goods and services that are qualitatively competitive, cheaper and more affordable than the imported ones. That way, the attendant benefits of the CCS will be fully realized as well as optimized.

    It is my considered opinion that while consumer credit scheme holds great promise for promoting financial inclusion and economic development in an emerging economy like Nigeria, it also faces several challenges that need to be addressed. Consequently, by implementing appropriate risk management strategies and regulatory frameworks, among others, policymakers can ensure the sustainability and effectiveness of the scheme in order to drive economic growth and improving the well-being of individuals in our great country.

    •Dr. Adaramewa, a lawyer and an ex-banker wrote in from Lagos

  • Consumer Credit Scheme: Credit Corp warns against fraudsters

    Consumer Credit Scheme: Credit Corp warns against fraudsters

    Following the nod by the Federal Government for the takeoff of the Consumer Credit Scheme, the Nigerian Consumer Credit Corporation (CREDITCORP) has raised the alarm over Ponzi schemes set up to defraud unsuspecting Nigerians.

    The Federal Government body, CREDICORP, that is facilitating the scheme stated that eligible consumers do not have to pay money to access the portal or even the loan.

    “There is no place in which it was stated that Nigerians would have to pay to gain access to this portal or access the loans. Nigerians are advised to take note as many fraudsters might try to take advantage of this scheme and defraud unsuspecting Nigerians,” said Ajuri Ngelale, Presidential Adviser on Media and Publicity.

    According to Ngelale, the Consumer Credit Scheme serves as the lifeblood of modern economies, enabling citizens to enhance their quality of life by accessing goods and services upfront, paying responsibly over time,

    It was also said to facilitate crucial purchases, such as homes, vehicles, education, and healthcare, essential for ongoing stability to pursue their aspirations.

    Pressed further, Ngelale said the credit scheme which is only for working Nigerian’s was put together by Nigeria’s CreditCorp, and has been initiated in line with the organisation’s mandate to accelerate consumer credit access to 50% of working Nigerians by 2030.

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    “To achieve this, CrediCorp, a company owned by the Federal Government will fix the structural barriers to accessing consumer credit in Nigeria, and catalyse the market with capital, guarantees, and policy.”

    Explaining how it will work he said, “As with every other loan scheme, working Nigerians through responsible repayment will build credit histories, unlocking more opportunities for a better life.”

    To obtain the loan, interested working Nigerians will have to visit the portal that CREDICORP has created for the scheme to express interest in receiving the consumer credit. “In line with the President’s directive to expand consumer credit access to Nigerians, CREDICORP has launched a portal for Nigerians to express interest in receiving the consumer credit. Working Nigerians interested in receiving the consumer credit can now visit www.credicorp.ng to express interest,” stated Ngelale.

    According to a statement on its official website, as to how it makes loan available to consumers, the CrediCorp including its consumer credit guarantee fund, works closely with the Central Bank of Nigeria (CBN), the financial sector, identity management, credit registries, fintechs, consumer protection, and policy makers on the mission to avail loans to qualified Nigerians.

    Information from the website explains that as part of the plans to ensure a smooth running, the scheme will be rolled out in phases, starting with members of the civil service and cascading to members of the public.

    For this first phase of the exercise, there is a deadline and that is Wednesday, May 15th, 2024. All who are eligible and are seeking to benefit from this scheme should have registered on or before this date.

    There is no place in which it was stated that Nigerians would have to pay to gain access to this portal or access the loans. Nigerians are advised to take note as many fraudsters might try to take advantage of this scheme and defraud unsuspecting Nigerians.

    According to the CreditCorp, this scheme will help strengthen Nigeria’s credit reporting systems, ensuring every economically active citizen has a dependable credit score. “This score becomes the personal equity they build, facilitating access to consumer credit.”

    Also under this scheme, credit guarantees will be offered, and wholesale lending to financial institutions dedicated to broadening consumer credit access will be attained.

  • ‘Framework for consumer credit scheme underway’

    ‘Framework for consumer credit scheme underway’

    Barring any last minute hitches, the framework for the implementation of the much touted consumer credit scheme will be unveiled soon, The Nation has learnt.

    Giving this hint at the weekend was the Registrar/Chief Executive Officer of the National Institute of Credit Administration (NICA) Prof. Chris Onalo.

    According to the don, the Federal Government is working with the NICA to develop a framework for consumer credit in Nigeria.

    While noting that NICA will provide advisory, policy drafting, legislative and regulatory advocacy services, while serving as catalyst for the process, among others, Onalo further revealed the scheme which is expected to be launched by the President soon to boost the consumer credit ecosystem will deliver to Nigerians the much desired robust and sustainable economic structure, that would enable Nigerians to bring out the best in them to make Nigeria Africa’s economic power, boosts increased economic activities, accesses consumer purchase using credit as well as being able to take business loans from banks under a safe and sound sector-wide credit guarantee arrangements for the nation’s micro, small and medium enterprises (MSMEs).

    It would be recalled that in November 2022, the Federal Government launched the NICA Act No 26 of 2022 with the objective to serve as a national body of expertise for matters relating to credit management in the country by setting professional standard, awarding professional qualifications in credit management; testing and assessing those who wish to become members, controlling, supervising and regulating the profession of credit management in Nigeria.

    The Act also enables NICA to promote the integrity and weigh the capacity of government at all levels to borrow for economic development against the backdrop of internal creditworthiness assessment of the overall economy.

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    Since the NICA Act was unveiled, the institute has continued to commit to the development of a holistic credit based economy.

    Expectedly, last December, the Presidential Council on Industrial Revitalisation, formed a Technical and Regulatory Working Groups composed of NICA, Central Bank of Nigeria, National Identity Management Commission, and the Federal Competition and Consumer Protection Commission to develop a framework to improve consumer credit in Nigeria, among others.

    Other members are the National Insurance Commission, Bank of Industry, the Federal Inland Revenue Service, International Finance Corporation, the Ministry of Finance, the Ministry of Industry, Trade and Investment, as well as the Ministry of Digital Economy and Telecommunication.

    The Committee was given a five-month schedule to complete its objectives, according to a statement by the Minister of Industry, Trade, and Investment, coordinating the process.

    Justifying the need for the scheme, Onalo also observed Nigerians’ desires to buy things that they want on credit, especially household appliances, automobile, mortgages, medical bills, loans, mobile telephone infrastructure, amongst others, may have made this scheme inevitable.

    “With NICA’s statutory power, the federal government felt that this is the Institute to work with; the government can partner with NICA to advance economic development, particularly in moving the economic landscape from what it has been since independence to a new horizon,” said an elated Onalo.