By Omodele Adigun and Chinenye Anuforo
The Central Bank of Nigeria (CBN) has disclosed that the number of registered borrowers increased to 33,456, 922 million as at June 30, 2016 from a mere 78,189 in December 2010.
The CBN Governor, Godwin Emefiele, who made this disclosure yesterday in Lagos during the 3rd National Credit Reporting Conference by Credit Bureau Association of Nigeria (CBAN), commended the bureaux operators for this feat and charge them not to rest on their oars as there are more grounds to cover for Nigeria to have a robust credit reporting system.
According to him, the apex bank saddled with the responsibility of ensuring the stability of financial system has been formulating policies aimed at achieving a sound and stable financial system. In realisation of this objective, the CBN had vigorously pursued the development of the key financial infrastructure such as the payments and credit reporting systems.
He said a credit reporting system comprises the legal, regulatory and institutional arrangements put in place to deal with the information asymmetry inherent in lending and related financial transactions. “Credit reporting has been acknowledged as one of the major means of growing credit in an economy. It also acts as a social accountability mechanism that promotes responsible behaviour in the credit and financial markets. It has long been established that a weak credit reporting regime constrains lending and poses a threat to the overall stability of the financial system.”
The Chairman of Credit Bureau Association of Nigeria(CBAN), Jameelah Sharrief-Ayedun, said that the association in conjunction with the CBN and International Finance Corporation (IFC) is poised to to bring awareness to Nigeria about credit reporting.
She added: “Credit reporting is an infrastructure that exists in every developed economy. And without that, you find that there is low activity to lending. And we all know that with more lending, people can improve their standing in life;they have access to funds to be able to buy homes, to be able to get better education; to be able to even fund more businesses. So we want to make sure we have infrastructure that supports those types of activities and economic growth in the country.”
Emefiele explained that credit reporting in Nigeria has its antecedents in the financial crisis of the late 1980’s and early 1990s when large quantum of non-performing credits threatened the banking industry. “That era witnessed persistently rising incidence of abandoned facilities in Nigerian banks with attendant losses and erosion of banks’ capital.
To arrest the situation, the CBN in January 1998, established the Credit Risk Management System (CRMS), a public credit registry operated by the CBN that banks are required to report to and check-up all credits above N1 million.”
The CBN boss noted that apex bank in collaboration with IFC have continued to provide training to operators and regulators in order to build capacity in the credit reporting industry.
“We have just concluded the Bank Verification Number project and when the BVN is made available to the credit bureaux, this will no doubt increase the quality of the credit reports.
Also, in collaboration with other stakeholders, we have designed a uniform data reporting template for provision of data by credit providers to the three credit bureaux. This has reduced the problems associated with provision of data in several different templates to the credit bureaux.”