The National Institute of Credit Administration (NICA) has expressed alarm about the negative consequences of limited credit availability on the growth of enterprises, their capacity for production, and the escalation of poverty in Nigeria.
NICA emphasizes in a new statement the need of a functional consumer credit system that makes it easier to purchase goods and services on credit and reduces the need for cash transactions.
This method encourages economic growth, boosts domestic production, and makes it possible for individuals to fund important and urgent initiatives.
The statement read: “In the country, consumer credit has been bedevilled by challenges such as the demand for collateral by the lending institutions which many of the SMEs lack, unwillingness of banks to give out long-term loans, and high interest rates among other challenges.
“These have hindered the dreams of many ambitious entrepreneurs and regular salary earners from expanding their businesses or acquiring other household items.
“It has also worsened financial inclusion, most especially at the grassroots.
“Poor credit access hinders business growth, reduces production capacity, and adds to the poverty level in the economy.
“To support the growing economy and unlock Nigeria’s economic potential, credit availability should be prioritised.”
NICA emphasised the critical role of an effective consumer credit system in fostering economic growth. Such a system would enable individuals to purchase goods and services on credit, reducing the need for cash transactions.
It also facilitates financing urgent and significant projects, ultimately stimulating domestic production.
However, Nigeria’s path to acquiring consumer credit is fraught with challenges. Among these are the stringent demands for collateral, which many small and medium-sized enterprises (SMEs) cannot meet, the reluctance of banks to offer long-term loans, and the burden of high interest rates.
These obstacles have stifled the ambitions of numerous entrepreneurs and regular income earners and deepened financial exclusion, particularly among grassroots communities, according to NICA.
NICA also stresses the importance of making consumer credit services accessible to a broader population segment, including the informal sector, low-income earners, artisans, and SMEs. By extending credit to these crucial economic players, the initiative aims to enhance the resilience and growth of the Nigerian economy
