CREDIT LANDSCAPE SHOULD BE TAILORED TO SPECIFIC NEEDS

Friday, 19th April 2024.

CreditEconomy News Interview

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Omolara Muinat Ismail, FICA

Deputy General Manager, Guaranty Trust Bank Plc

CREDIT LANDSCAPE SHOULD BE TAILORED TO SPECIFIC NEEDS

Omolara Muinat Ismail, FICA, Deputy General Manager, Guaranty Trust Bank Plc, speaks on how to transform the economy with credit, in the National Institute of Credit Administration’s Credit Economy News.

 

What is your assessment of credit business in Nigeria?

I believe the credit business has seen significant growth and evolution over the period of years, and this is being driven by lots of regulatory reforms, technological advancements, and the changing consumer behaviour. However, there are still a lot of challenges that will be addressed to further improve this landscape. Among these challenges, is access to credit facility. It is not everybody that finds it accessible despite all the improvements.

“We find out that the Small and Medium Scale Enterprises (SMEs), and individuals without a formal credit history still finds it difficult to access credit. This kind of impact limits the financial inclusion and the opportunities that could arise from them”.

We have also seen the interest rates increase, but the truth is, in a high interest rate environment, it definitely impacts on the small businesses, because prices of products and services will be high, and it becomes unaffordable. In the regulatory environment, I think there should be a lot of improvements, where there is financial discipline, lenders should be assured that there is redress where people decides not to pay.

 

What is your take on the ongoing economic reforms in Nigeria?

These economic reforms are aimed to address the various challenges and improve economic performance.

“Some of the key focus includes diversifying the economy away from the oil sector, improving our infrastructures, enhancing the business environments, ensuring the ease of doing business, and promoting social welfares”.

For Nigeria to survive, and to be among those counted in the world’s strongest economies of superpowers, these are crucial issues to be addressed for a long term development. This can lead to a sustainable economic growth and job creation. Effective implementation and addressing corruption have to be strongly impacted for the ongoing economic reform to be successful. Also, we have to ensure that everybody feels inclusive.

 

What would you say should be the Nigerian type of consumer credit?

Our credit landscape is peculiar and should be tailored to specific needs. Also, it must have the characteristic of the Nigerian population. By this, I mean, we should go back to some of the points I made earlier, which is accessibility to credit. We should be able to have consumer products that will impact on the wide range of individuals, either those in rural areas, or those without a formal credit history. We can only achieve this through an alternative credit scoring method.

“We cannot use the parameters that is used in measuring or analyzing a credit for a structured business; that cannot be applied for a business that is not structured. Today, hundreds of thousands of entrepreneurs that we have in Nigeria use their personal accounts in running their businesses”.

We have to design specific products to meet tailored specific individuals, as affordability and flexibility are important to achieve the consumer credit goals.

 

Professionally speaking, what is your advice to the government to transit the economy from cash based to credit system?

Honestly, if you ask me, this can be a very complex one, due to our geographical location and our level of education. But, I think it is something that we have started out in the right direction, and this has been driven largely by a lot of Fintechs. The banks are doing what they can, but then we have seen the influx of the Fintechs around, also helping because they do not need the physical presence to drive this. We have to keep expanding our access to banking services, promoting the use of electronic payments and strengthening the credit information sharing mechanism.

 

What should be done to make Nigeria’s Micro, Small and Medium Enterprises more supportive of the economy?

Access to finance is the major factor that affects SMEs. If we are to provide them with access to finance, it has to be at a very low cost, because they don’t have the financial muscle to actually deal with anything that impacts too much on their operating income.

“We must provide training and capacity building programmes for SMEs to enhance their skills, the management practice they need to understand, corporate governance, defining their costs, ensuring that they don’t muddle things up, and provide infrastructure development”.

 

As a statutory professional body for the control, supervision, and regulation of credit management profession in Nigeria, what support would you suggest National Institute of Credit Administration (NICA) should provide to help achieve a strong credit economy?

National Institute of Credit Administration (NICA) as a statutory professional body should be in the driver’s seat if we want to achieve a strong credit economy. They must train, and certify professionals so that their skills or knowledge in credit management will be enhanced. This will improve the quality of credit management practices in Nigeria. NICA should also be involved in research and advocacy, i.e conduct research on credit management issues, and advocate for policies that will promote strong credit economy. Further to the above, NICA should develop and promote professional standards for credit management practitioners in Nigeria, which will promote adherence to best practices and ethical standards by credit professionals.

“NICA should facilitate networking opportunities for credit professionals to enable knowledge sharing, and, collaboration between stakeholders, government agencies, financial institutions, and even international organizations”.

In order to promote a strong credit economy. Consumer education, I think largely, is also a huge part of the responsibility that NICA needs to provide. Essentially, I think they must always continue to recommend policies and their input is needed in policy making, especially regarding consumer credit in Nigeria.

 

What is your advice to Nigerian businesses in relation to integrity and honesty in business?

“For you to really succeed and be on the map, the leadership of businesses must be set in the right tone from the top, and demonstrate commitment to integrity and honesty in all business dealings”.

There must be a book on clear policies and procedures, outlining effective standard of conduct, including the guidelines for ethical behaviour or conflicts of interest.

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