THERE IS NEED FOR ENHANCED CREDIT BUREAU SYSTEM THAT CAN PROVIDE ACCURATE INFORMATION ON BORROWERS’ CREDIT HISTORY

Tuesday, 24th May 2024.

CreditEconomy News Interview

…Over 500,000 people read our news story, number still counting

DR. Baruwkelyon A.M.C. Gaddiyel, FICA,

Managing Director/ Chief Executive Officer of Suthain Bourdillon Nig. Ltd,  Maximonis Managements Nig. Ltd, and Adamas Mampoli Nig. Ltd.

THERE IS NEED FOR ENHANCED CREDIT BUREAU SYSTEM THAT CAN PROVIDE ACCURATE INFORMATION ON BORROWERS’ CREDIT HISTORY

– DR. Baruwkelyon A.M.C. Gaddiyel, FICA, is the Managing Director/ Chief Executive of foremost companies consisting of Suthain Bourdillon Nig. Ltd,  Maximonis Managements Nig. Ltd, and Adamas Mampoli Nig. Ltd. He speaks on how to address credit challenges in Nigeria, in National Institute of Credit Administration’s interview article

 

How can the wave of Credit defaults in Nigeria be tamed?

For credit default in Nigeria to be tamed, it is important to take into consideration the following strategies.

Firstly, the establishment and reform of credit Bureau department, improving and enhancing the credit bureau system to ensure accurate and up to date information on borrowers’ credit history are available at any time needed.

Secondly, there must be stringent loan condition; lenders should implement strict loan conditions including thorough credit checks and collateral requirements.

And also, there should be strict legal system to protect lenders from falling victim of defaulters who use the court of law to escape loan repayment when it is due.

Thirdly, there must be interest rate regulations to regulate interest to prevent extortionate lending practices.

Fourthly, financial literacy programme will be established to educate borrowers on responsible borrowing and debt management practices and establishment of debt recovery.

Mechanisms for efficient debt recovery is important. Mechanisms including stringent legislation and debt counseling which includes:

The establishment of collateral registry to prevent multiple lending against the same assets.

“One of the mechanisms to tame credit default should include the encouragement of longer loan tenor to reduce the risk of credit defaults. It is obvious that credit insurance will protect lenders against default, therefore, establishing Credit Insurance Scheme is a must and should be together with the following: There must be establishment of credit regulatory enforcement agency to avoid lending malpractices; establishment of digital lending platforms, which will enhance lending efficiency and reduce the risk of default; loan origination standard establish strict loan origination standards to prevent reckless lending practices”.

By implementing the above strategies, credit default in Nigeria can be significantly reduced, promoting healthier lending environment and financial stability

 

What are the impediments to debt recovery in Nigeria?

The impediments to debts recovery in Nigeria includes: Inefficient legislations and legal system – Manipulative legal processing, cumbersome court process hinders seriously the swift debt recovery process, and also, lack of effective collateral registry. This includes inadequate collateral registration and verification process.

Other impediments to debt recovery are exorbitant interest rate which leads to debt accumulation and default; National Economic Policy instability also create a serious impediment to debt recovery due to economic down turn and inflation; abuse of weak legal system and court processes which involves debtors exploiting legal loop holes to delay loan repayment; inadequate legislation and laws on debt recovery, which includes lack of debt recovery professional’s security against intimidation from defaulters.

“Another challenge to debt recovery in Nigeria includes corruption and bribery which encourages unethical practices, and high debt recovery cost and finally, lack of alternative dispute resolution mechanism”.

Certainly, addressing these impediments is very crucial to improving debt recovery in Nigeria and promoting a healthier credit environment.

 

As a Fellow of the National Institute of Credit Administration, what support would you prescribe for the institute across Nigeria and overseas?

Honestly, as a fellow of the National Institute of Credit Administration (NICA), I would prescribe the following support for the institute across Nigeria and overseas to promote its growth and stability. In the first place, government recognition and partnership is a must which involves collaboration with government establishments and agencies such as the Central Bank of Nigeria (CBN) and the Federal Ministry of Finance to promote credit education and support best credit practices ethics.

Secondly, I shall prescribe industry partnership with National institute of Credit Administration. I mean strategic partnerships with banks, financial institutions and credit bureaus to provide credit facilities and training.

Furthermore, I shall prescribe international affiliation and collaboration with global credit organizations and institutions, such as International Association of Credit and Collection professionals (ICCP) to stay updated on best practices and global trends, and capacity building and training programmes for credit professionals including workshops and conferences.

“The National Institute of Credit Administration will certainly need research and development in credit management for the publication of Credit management Journals, articles and case studies, to promote credit management knowledge and information sharing”.

I shall prescribe a high standard certification and accreditation programme for credit management professionals such as the Certified Chartered Credit Institutions and Organizations.

Most importantly, public awareness campaign to educate individual and business organizations on the importance of credit management and responsible borrowings. Furthermore, I will suggest in strong term, sound mentorship programmes for Credit Management professionals for guidance and credit knowledge transfer and sharing.

There must be digital transformation system for the operation and activities of National Institute of Credit Administration to enhance reporting and recovery, as well as online training and education.

“National institute of Credit Administration must engage in establishments of branches and chapter across Nigeria and overseas to encourage the institute’s expansion and networking of institute’s members and sharing of information and knowledge”.

Lastly, there must be strong collaboration with academic institutions such as universities and research institutions to promote credit management education and research.

Also, the institute should establish credit management professionals ethics and standard to promote sound professional integrity and ethical practices and standard among the members of the institute. By implementing these measures, NICA can enhance its impact on the national economy and promote credit excellence.

 

What can be done to assist overseas companies recover business debts owed them in Nigeria?

First, to assist overseas companies in recovering business debt owed to them in Nigeria, I wish to suggest the following strategies and steps  to be taken.

The most strategic moves will be to engage government and professionally certified local debt recovery agencies who have sound knowledge with local laws and regulations. Having engaged debt recovery professionals, the next line of action will be to pursue legal action through the Nigerian courts including filling law suits and obtaining judgments. There will also be need to utilize arbitration services, such as the Lagos Court of arbitration to resolve the debt disputes, and also, bringing in a professional mediator will be a good arrangement whose negotiation with the debtor company will help to reach a settlement.

“The debt must be reported to Nigeria Credit Bureaus to affect the debtors’ credit score, and there must be collaboration with Nigerian law enforcement authorities, such as the Economic and Financial Crime Commission (EFCC) to carry out extensive investigation on the debt. The use of international debt recovery frameworks will not be left out, especially the United Nations convention on International trade Law”.

Finally, there will be need to seek diplomatic assistance. If necessary, engage diplomatic channels such as the oversea company’s embassy or consulate to facilitate debt recovery, and monitoring enforcement of judgment to make sure debt recovery is done without compromise. By exploring these options, overseas companies can effectively recover business debts owed to them in Nigeria.

 

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