Nigeria is an entrepreneurial economy with an estimated 37 million micro, small and mediumsized (MSMEs) companies, whose contribution to economic growth and job creation is crucial and significant.
However, less than a third of the country’s MSMEs have successfully obtained loan from a financial institution with investigations revealing that most of them use personal savings or reinvested profits as a source of business financing. The smaller the business, the less likely it is to have applied for, and received, a loan from a bank or microfinance institution.
Many of these businesses have the potential to become bigger and more prosperous, but their growth is restricted for a variety of reasons – chief among them is access to finance.
It is true that Nigeria is among the 25 priority countries that are part of the World Bank Group’s Universal Financial Access 2020 initiatives, whose goal is to extend access to financial services to all adults (at least 80 per cent) by 2020. In 2014, 66 per cent of adults in Nigeria (55 million adults) didn’t have access to a transaction account, according to the World Bank’s Global Findex data, while the 2019 EFInA report shows that 38.6 per cent of Nigerians (76 million) are financially ex- cluded with greater percentage being women and people from Northern extraction.
This means that the Federal Government still has a long way to go in reaching its objective to bridging the financial inclusion yawning gap. However, it is noteworthy to mention that financial institutions have been playing a role in helping the government to achieve their financial inclusion goal as it is widely believed collaboration between the private and public sector is key to growing and developing the nation’s economy.
Furthermore, financial experts believe that the challenge facing access to credit and financial inclusion is hinged on non-participation in shared services initiatives to reduce channel costs, reduced focus on delivering financial services to informal segments and less innovative products to serve low income rural residents.
Also, these MSMEs as well as salary earners have singled out loans with high interest rates, journey-of-no-return paperwork or requirements as well as provision of guarantors among others, Guaranty Trust (GT) Bank is offering a time loan product called Quick Credit which is aimed at financing working capital as well as giving funds worth up to three months of an individu- al’s salary in less than two minutes.
This product offer quick loans to salary earners whose account is domiciled in GT Bank and comes with a convenient repayment plan spread over 12 months at a competitive interest rate of 1.75 per cent per month.
Speaking on the product, its Chief Executive Officer, Segun Agbaje, said: “GTBank is regarded by industry watchers as one of the best run African financial institutions and Quick Credit is in line with the bank’s commitment to offer- ing a superior banking experience that is tailored to its customers’ financial needs, which include access to non-restrictive cash flow. Basically, fintech is doing financial transactions from outside the bank- ing hall. I think in terms of innovation fintechs are creating payment platforms and banks are capable of creating payment platforms as well. So, we just need to start thinking more like fintechs which is what we are doing. That is why when we are launching retail products we launch them online where you can access them on your phones”.
Salary earners whose account is domiciled in GTBank. Salary earners who have received a monthly payment from the same employer for at least three consecutive months.
Repayment plan and interest rate
Quick Credit offers a convenient repayment plan spread over 12 months at a competitive interest rate of 1.75 per cent per month. As regards small businesses, repayment is structured in two ways: monthly interest payments and quarterly principal repayments (option is only available for schools) Equal monthly repayment of principal and interest.
Funds are disbursed instantly, eligible customers can apply via GAPs/ GAPslite platform, access to 50 per cent of average annual turnover and one can open a corporate account and operate it for 12 months before applying for the credit facility.