The National Institute of Credit Administration (NICA) has sounded the alarm on the detrimental effects of limited access to credit on business expansion, production capabilities, and poverty levels across Nigeria. Expressing concerns over the current state of the country’s consumer credit system, NICA emphasized the urgent need for government intervention to address the pressing challenges faced by entrepreneurs and wage earners.
NICA’s statement underscores the crucial role of a well-functioning consumer credit system in facilitating the acquisition of goods and services on credit, thereby reducing reliance on cash transactions and enabling individuals to finance essential projects. However, the institute highlighted significant hurdles impeding the accessibility of credit for many in Nigeria.
Among the challenges outlined by NICA are stringent collateral requirements imposed by lending institutions, the reluctance of banks to offer long-term loans, and soaring interest rates. These obstacles, according to NICA, have not only stifled the ambitions of entrepreneurs but also deepened financial exclusion, particularly in grassroots communities.
The consequences of restricted credit access, as outlined by NICA, include hindered business growth, diminished production capacity, and exacerbated poverty levels. To address these issues and unlock Nigeria’s economic potential, NICA has called for prioritized efforts to enhance credit availability.
In response to NICA’s concerns, the Nigerian government has shown a commitment to improving the country’s credit system. Collaborating with NICA, the government aims to develop a consumer credit framework that promises to revolutionize the credit landscape. This initiative includes the formation of Technical and Regulatory Working Groups under the Presidential Council on Industrial Revitalization.
Furthermore, the Federal Government has allocated an N100 billion Consumer Credit Fund in the 2024 national budget to stimulate economic growth and improve the welfare of the populace. This move reflects the government’s recognition of the importance of expanding credit access to bolster the economy.
As Nigeria grapples with the challenges of limited credit access, NICA’s call for government action serves as a reminder of the crucial role that an effective consumer credit system plays in fostering economic growth and reducing poverty levels. With collaborative efforts between the government and stakeholders, there is hope for a brighter future where credit is more accessible to all segments of society, driving prosperity and development across Nigeria.
Credit: Nairametrics
