The Chief Executive Officer of Liberta, one of Nigeria’s fastest-growing leasing companies, Dr. Ayokunnumi Olugbemiro, has called upon the Nigerian Credit Bureau to embrace its crucial responsibilities in meticulously compiling data of individuals seeking loans and enforcing strict adherence to repayment agreements.
The Nigerian Credit Bureau is the country’s agency charged with validating information in the lending industry.
Speaking with Parallel Facts in an exclusive interview in Lagos, Ayokunnumi stressed the imperative nature of the Bureau’s role in safeguarding the nation’s financial stability while expressing her concern over the prevailing archaic system that had allowed loan defaulters to roam freely and evade their obligations across the country, she emphasized the urgency for a drastic overhaul.
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“It is essential that the Nigerian Credit Bureau rises to the occasion and revamps its practices to hold individuals accountable for their debts.”
Speaking further, she opined that the agency needs to explore “state of the art” technology to integrate data within the Bureau’s operations.
By adopting advanced data analytics and cutting-edge verification techniques, the Bureau could effectively assess creditworthiness and reduce the risk of non-payment.
She then proposed a series of concrete measures to revolutionize the credit reporting system which include the establishment of a comprehensive database that accurately reflects the credit history of borrowers, making it easier for lenders to make informed decisions.
Moreover, she advocated for more vital collaboration between financial institutions and the Bureau to share real-time information on loan defaulters, preventing them from taking advantage of the current fragmented system.
She said “The Bureau is not effective in credit reporting as far as I’m concerned. Some people have unpaid loans but they will approach other companies and they will still give them loans. The Bureau should have the compiled data of all loan collectors and make it public for microfinance banks to know the credit history or records of their prospects.
“One look at why the Bureau is lagging behind is probably because they don’t have the technology. They do not have a system that enables immediate integration of customers’ credit records. They are either still using old technology or they still have to type all the information via Excel. So, it’s usually cumbersome and when you send it to them, you still send it via mail. By now, there should be an integration point where, as we are seeing the data on our system here, they should be seeing it automatically on theirs.”
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Ayokunnumi also shared her experience with advanced countries, highlighting that defaulting on loans is exceptionally rare due to the stringent requirement of clearing existing debts before obtaining new ones.
According to her “In advanced countries, they use credit system; your credit rating gives you an opportunity to access loan anywhere in their country. So, if you don’t have a good credit rating, you can not access credit. It is as bad as you’ll need a good credit rating before you rent an apartment. This is because their economy thrives on credit. Nigeria does not. Nigeria is a cash economy.
“So, you can’t leave a landlord that you’re owing and approach another to secure an apartment. The landlord will check your credit rating. By this, it makes default lower. It makes them borrow what they can pay back. But in Nigeria, where people know that the credit Bureau may not even discover whether one borrows somewhere, people can get away with anything they do.
“I agree that there can be default but it should not be intentional. The default might be an act of God; maybe there is a recession. But when people have taken loans in 20 places, with the intention of not paying back, that becomes a liability on the individual giving out the loans.
She recounted her endeavor to launch an app called “Nirra,” designed to provide small loans to those in need. Unfortunately, a significant portion of the recipients struggled to repay these loans.
Furthermore, she expressed her dismay at the prevailing culture in Nigeria, where many individuals take loans without fulfilling their repayment obligations.
“We launched Nirra here and we test run. We gave small amounts of loans to people and people did not pay back. Many people came to download the app but ended up calling friends and family to get the app installed on their phones in order to get money but ended up not repaying it back. In fact, they have a WhatsApp group where they update themselves on the latest loan app.
In discussing the influence of the government, Ayokunnumi berated how it has consistently shielded loan defaulters while neglecting to offer similar protection to loan providers.
“And to make the whole matter worse, our government also protects them. Aside from the excesses of online lending apps, like going into customer’s privacy, and posting debtors’ pictures, the truth is, someone has gone to the app to get a loan but with the intention of not paying back. The only way those companies can enforce repayment is by doing that, which is totally wrong. I do not subscribe to that because there are other ways. But because the mindset or culture of some Nigerians is taking a loan and not paying back. It’s a cultural problem.
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“Government should as a matter of urgency begin to protect the interest of credit providers. The essence of our business is to make profits but some people are bent on taking loans but not paying back,” she said.
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