Nigeria’s Federal Government has launched a new initiative to improve consumer credit and stimulate economic activity in the country. The Presidential Council on Industrial Revitalization has set up a Technical Working Committee to examine the current state of consumer credit in Nigeria and propose a comprehensive regulatory framework to enhance it.

Consumer credit is a vital component of successful economies, as it allows consumers to access funds for large purchases such as cars and homes, as well as for starting businesses or investing in education. Consumer credit also helps to increase demand for goods and services, creating more jobs and income opportunities.

However, consumer credit in Nigeria faces many challenges, such as high-interest rates, stringent eligibility criteria, low awareness, and insufficient credit supply. According to the Central Bank of Nigeria (CBN), consumer credit in Nigeria rose by 1.3 percent to N2.35 trillion in the first quarter of 2023, but this represents only 4.5 percent of the country’s gross domestic product (GDP), compared to the global average of 18 percent.

The Technical Working Committee, chaired by Olawale Edun, Minister of Finance and Coordinating Economy, and assisted by Doris Uzoka-Anite, Minister for Industry, Trade and Investment, and Bosun Tijani, Minister for Communications, Innovations, and Digital Economy, aims to address these issues and develop a sustainable consumer credit system for Nigeria.

The committee, which comprises representatives from various financial institutions and regulatory agencies, has adopted a consultative approach that draws on the experience, knowledge, and expertise of the credit system ecosystem. The committee has agreed on a five-month timeline to achieve various objectives, including:

• Increasing consumer credit uptake in Nigeria
• Enabling a sustainable credit system for the country in line with global best practices
• Enhancing the supporting infrastructure (technology, data, financial institutions, and global partners) to boost credit operations and equip players in the industry
• Addressing issues of corruption to foster economic growth

The committee also seeks to align its work with the National Financial Inclusion Strategy, which aims to reduce the proportion of adult Nigerians that are financially excluded from 46.3 percent in 2010 to 20 percent in 2020.

The initiative is expected to have far-reaching benefits for the Nigerian economy and society, as it will improve the standard of living, reduce poverty, increase local production, and support the recovery from the COVID-19 pandemic.

The Minister for Industry, Trade and Investment, Doris Uzoka-Anite, said at the inaugural meeting of the committee: “The absence of a well-structured consumer credit system has been a significant impediment to financial inclusion and economic prosperity. We are confident that this committee will deliver on its mandate and provide a roadmap for a robust and inclusive consumer credit system for Nigeria.”

Source: BusinessDay