One year after the federal government established the Nigerian Consumer Credit Corporation (CREDICORP), the agency is already making waves in transforming how Nigerians access essential goods and services.
In this exclusive interview with Nairametrics, CREDICORP CEO Uzoma Nwagba reveals how the institution, built from the ground up, has delivered consumer credit to over 40,000 Nigerians in just six months since receiving funding, and it’s only getting started.
CREDICORP’s mission, he says, is not about handing out money but enabling everyday Nigerians to buy life-enhancing goods and services, such as vehicles, smartphones, solar panels, home improvement, and more on credit, instead of relying on outdated “cash and carry” systems.
But to scale Nigeria’s credit culture from a mere 3% of the population to South Africa’s 50%, he warns, there must be a major overhaul of the credit reporting regime and a national shift toward trust and enforceability in the credit ecosystem.
Excerpts:
Nairametrics: CREDICORP recently turned one year since it was established by the government. How has it been, and what have you achieved so far?
Uzoma Nwagba: It’s been one year since we got set up in April of last year, that was when my appointment happened. And the President has been very consistent with his vision to enable more and more Nigerians to get out of a cash-and-carry life, which is where they have to save money over time to buy everything, or forfeit the good. They have to pay cash for everything.
In more advanced economies, you can get a vehicle, a home, solar energy, things that make your life better, education, medical care, you can get it now, and you pay for it with your income over time.
So, you are living a better life now. The knock-on effect of that is that if we also enable people to buy things that are locally made, then there’s just a lot more consumption early on of locally made goods and services, growing local industries, and creating jobs.
So the President has been very particular about this. We have a new institution. We have set up a clear plan.
The day I was appointed, CREDICORP did not exist. No office, no templates, no staff, nothing. So this has been an opportunity to build a government institution from scratch, while also delivering the goals that Mr. President has set.
We are a development finance institution, so it’s a wholesale bank with a credit guarantee portfolio company or partnership, and then two added jobs of advancing the consumer credit ecosystem, and driving cultural reorientation of the public to see credit as a life-enhancer to be embraced. We received some funding about six months after we were set up.
So, for those first six months, it was a lot of bootstrapping, just raising money from people because I’m not the type to just sit and wait. So, raising money from other friendly institutions, people I’ve worked with in the past, people who supported, who just really believe in the mission, and give us an office here, give us a vehicle here, give us some funding to go and engage the financial institutions.
And in that period, even before we received funding from the government, we were able to build out our systems, put out several expressions of interest, engage extensively across the country, poll millions of Nigerians to let us understand their credit needs and design products and initiaities appropriately for them, and shortlist the first of our growing list of financial institutions.
We received close to four million survey entries from around the country and also engaged over 150 financial institutions, banks, microfinance banks, fintechs, etc. And in that process, we were able to create those partners and those partnerships in anticipation of funding.
But we’re six months in with funding, and in those six months, we’ve been able to reach 40,000 Nigerians with access to consumer credit for a start.
Specifically, not just money. We are not interested in simply giving money. We’re interested in the products and services that people use to enhance their lives, which is why the initiatives we have are designed around those.
Nairametrics: Since you are not just focusing on money, what type of products are you helping Nigerians acquire on credit?
Uzoma Nwagba: We focus on five thematic areas and our primary products. First is mobility: we want to help more Nigerians get vehicles, that’s motorbikes, tricycles, cars. Then we have digital devices to help Nigerians have access to cell phones and laptops. These make your life better. If you have a cell phone or a laptop, you can get on the internet, you can learn a new trade or skill, and you can connect with the rest of the world. And I mean smartphone, not just cell phone.
Then we have home improvements and furnishings to better your living conditions. We also have alternative energy, so we get solar panels and CNG power, alternative energy for your microenterprise.
And then we have life essentials, which enable services such as medical. So, on these five thematic areas, we are focused on driving consumer credit to those areas, and that is enabling people to access credit to buy goods and services that make their lives better.
We started off with the civil and public servants, where you have teachers, police, paramilitary, doctors, lawyers, and administrators. Then we expanded to the general public. Across the board, we found beneficiaries accessing our affordable credit to buy land for their retirement homes or furnish them, or buy vehicles or devices. But then, beyond that, we then kicked off specific initiatives that continue to reinforce these thematic areas or goals (the CALM fund for alternative energy, the SCALE programme for locally-made goods).
For mobility, we had the mobility fund for locally manufactured vehicles, N20 billion Naira, where we galvanized all the local manufacturers and assemblers of vehicles, whether it is Innoson, Nord, TVS, or DAG. And with that fund, they then set up channels for Nigerians to access credit to buy their vehicles. In the TVS example for locally-manufactured kekes, you now have people who are no longer waiting for hire-purchase benefactors or somebody to give them a Keke. You have just regular Nigerians who can buy a Keke and do their business during the week, and obviously take care of their families. These are everyday Nigerians, not fancy people, and a Keke costs close to 3 million Naira each.
Then we also have the one with AutoCheck, which is the largest network of vehicle financing that works with car dealerships across the country.
What we saw is that the new cars are generally expensive. It can cost you 40 million Naira, and most Nigerians cannot afford that.
So, we allow Nigerians who want to purchase used cars to also get used cars. You can get a used NORD if it’s available. You can also get a used Toyota, but it would come at a higher (market) interest rate than the discounted local NORD. We provide financing to Nigerians evaluated through AutoCheck at the point of purchase. Once you walk into the dealership that has an AutoCheck sign, you apply, and if you pass the application, you can come out with a car.
Nairmetrics: Does that mean any Nigerian can just walk into a dealer shop and apply to get a vehicle on credit?
Uzoma Nwagba: Yes, if it’s an AutoCheck dealership, you can walk in and drive out, and we continue to expand this program.
On digital devices, we are targeting a couple million Nigerians because these are cheaper goods, but – subject to funding – we are targeting 200,000 Nigerians who get access to digital devices, such as cell phones, laptops; people who normally would not have been on the digital economy; we have also identified partners who locally assemble these devices.
We are targeting people who are either not connected at all or they’re connected with feature phones because they can’t afford to pay the N60,000, N100,000, or N200,000 to buy a smartphone outrightly.
With access to credit, they can get a smartphone, be on the internet, connect with business, connect with networks, connect with education, with information, while paying a little bit over time.
Nairametrics: What is your assessment of the credit ecosystem in Nigeria, and what are you doing to drive a vibrant credit system?
Uzoma Nwagba: Let me give you a context for numbers. In South Africa, about 50% of the population has access to consumer credit, meaning that if 50% of the population in South Africa wanted to buy a motorcycle, they would not buy it cash and carry.
In Nigeria, that number is about 3%. If you add the informal credit, many people who borrow from informal means, their job, friends, and family, maybe 12%. But formalized structure credit it’s a little, just about 3%.
Now, for us to get from 3% to 50%, like it is in South Africa, we need about 180 trillion Naira in capital. That’s the amount of money that needs to be flowing in the financial system, in people’s hands as consumer credit.
Bear in mind that getting a good or service on credit still means that somebody is paying for it; it’s just that you, the beneficiary of the good or service, are not the one paying for it upfront. So, an institution still pays for it, then you pay over time. The government cannot be that institution at scale; it does not have 180 trillion Naira. How much was our last year’s entire national budget? So, the point is that we need the financial system to have trust to bring out that money.
We don’t believe that CREDICORP or the government can fund consumer credit on the scale that is required to make it a common reality for Nigerians. But what the government’s job is to play a catalytic role, which is what we are seeing now, and provide an enabling infrastructure and environment to engender trust and scale.
We are enabling capital and guarantees to financial institutions that currently do credit in any form; enabling them to do much more in consumer credit, and then to drive specific agenda in terms of enabling better lives for Nigerians in specific product areas, making the credit cheaper, incentivising locally manufactured goods so people can buy local.
We are also raising more and more capital to support financial institutions that do not have the capital but have the customer base and have the reach, especially the microfinance institutions and those that serve the bottom of the pyramid and underserved groups like women and youth.
Nairametrics: While there may not be enough liquidity in the system right now, as you have said, with what they currently have, why are banks shying away from giving credits to ordinary Nigerians?
Uzoma Nwagba: Why they are not bringing out the money today is because when somebody walks into their banking hall or get to their app, the financial institution does not know who the person is really, from a credit life, credit history standpoint.
So, our credit reporting regime needs a major rework. It exists; there’s a credit reporting Act, and there are credit bureaus.
The Credit Reporting Act today mandates that commercial banks report everybody’s borrowing to credit bureaus, but they report two out of three. That means that the credit bureaus are still open in a competitive scramble where no single party has comprehensive records.
Now, some microfinance banks do report (especially the major MFBs), but there’s a lot of non-compliance for the microfinance banks. And even where they’re required, they’re largely unenforced.
Commercial banks are easier to enforce because there are just 23 of them.
Now, if you get beyond the microfinance and get into finance companies, which are very many, and then the loan apps and digital money lenders, there’s a whole lot of consumer lending that is happening that is not reported to the credit bureaus.
In fact, based on the last anecdotal check, only about 13% of Nigerians have their records on the credit bureaus.
So, what that means is that credit bureaus or credit registries are making a fantastic effort just in a suboptimal regulatory environment.
I’m not even blaming them. Given the regulatory environment they’re in, they’re doing the best that they can, but the regulatory environment is suboptimal in the sense that one, it doesn’t require and enforce all credit to be reported to the credit bureaus, and it also doesn’t enforce that those the are reported by reported to all credit bureaus.
Nairametrics: What are you doing about this?
Uzoma Nwagba: So, we’re now going through a process, working with the CBN, and just reviewing that credit reporting regime with the legislation. And soon, with the CBN and a wider range of stakeholder engagements, we’re going to the National Assembly to present an executive bill to just revise the credit reporting regime and advance all the capabilities that the government has for rewards, enforcement, consequences, including things like access to government services.
If you have a bad credit history, and you want to renew your international passport, you should not be able to (subject to local laws), or at least you should be made to pay before you can.
Landlords should be able to check your credit if they want to let their house to you, and where the Act covers that, the incentives to enforce it get better. Those things are important, so that your credit behavior follows you everywhere you go.
There should be rewards too, meaning that if you’re also good with credit, many more people throw credit at you; financial institutions will give you more credit, give you better tenures, give you a cheaper interest rate (even single digit) because you are just judicious with credit.
But how would they know? They would only know if the credit reporting regime is comprehensive, and it’s accurate, and is a single source of truth.
Nairametrics: Last year, there was an announcement about your partnership with NIMC to build credit score for Nigerians. So, how far have you gone with that?
Uzoma Nwagba: Well, that has now been subsumed under the legislative reviews earlier discussed. That partnership was as much not to build scores as it was to expand credit reporting to tie to NIN, too, which is a more expansive identity (there are 100 million NINs as opposed to about 40 million BVNs)
So, that is looking into ensuring that credit reporting is done right in Nigeria. Your credits will not just be linked to your BVN, but also to your NIN, because the NIN is a more expansive identity.
Many more people have NINs than BVNs. So, that means if you borrow money from anywhere, it will follow you on your NIN. NIMC has fully set itself up to achieve that.
It’s just a matter of execution from the financial system to plug into NIMC. The NIMC Director-General, Bisoye Coker-Odusote, has been relentless in expanding the capabilities of the NIN identity.
Nairametrics: One major challenge in Nigeria, which I’ve observed from speaking with finance companies, is that a lot of Nigerians want to borrow with the intention of not repaying. Do you see this posing a challenge to what you are doing? How do you intend to mitigate this?
Uzoma Nwagba: So, the thing is, sometimes we talk like Nigerians are more criminal than anybody anywhere else. I don’t believe that. I think Nigerians are fundamentally good people and that it is our environment that places certain pressures on us, that if those pressures were placed on anybody anywhere else, they would also react the same way.
Of course, you have people who are fraudulent, who don’t want to pay back their loans. But I believe in systems. I believe that when you have a system that inevitably deters bad behaviour and rewards good behaviour, people will comply because it is in their best interest.
If it is in your best interest to protect your credit score by paying back your loans, if there’s a credit infrastructure that works, that drives how financial institutions lend money, you will want to do the right thing.
So, I don’t believe Nigerians are more predisposed to corruption or crime or to bad credit behavior. What I see is that they just don’t pay back because the consequence frameworks are not stringent.
And of course, you have the people who pay back out of just being responsible. You have that in Nigeria, you have that anywhere else.
