INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025

Page 8354

www.rsisinternational.org

The Development of Consumer’s Credit in Nigeria: Issues and

Propects

John O. Omligbe, Joseph Ekpe Edet

, Shishitileugiang Aniashie Akpanke, Lorrita Ogu

L.L.B (Unical); BL (Kano), LLM (Unical), Lecturer, Faculty of Law, University of Calabar, Calabar,

Nigeria.

Corresponding Author

DOI: https://dx.doi.org/10.47772/IJRISS.2025.910000682

Received: 28 October 2025; Accepted: 03 November 2025; Published: 21 November 2025

ABSTRACT

This paper examined some views from analysts who expressed concern about the growth of consumer debt and

its effect on the Nigerian economy as well as many other third world countries. Some analysts are afraid that the

combination of increasing debt and higher interest rates has impaired the ability of households to meet their

monthly financial obligations. The idea of Fostering effective credit administration in Nigeria in order to

encourage proper credit management development will become landmarks victory over poverty in Nigeria is the

observation of this paper. This was one of the reasons for the establishment of the General Assembly of Banks'

Chief Executives (GABCE) in Nigeria. However, this paper looked at payment of interests as a percentage of

disposable income have actually fallen since the end of the recession in 2001. Assessing Consumer Credit tells

us imperative things about our economy. The paper also ex-rayed the capacity of some individuals to borrow

effortlessly and refund those debts on time as agreed to stimulate the economy and growth. Consumers and

Consumer Credit are the instrument and brainbox of the economy, when credit is unavailable, consumers will

face foremost complications in borrowing. In this circumstance, consumers would consume less since they have

less access to credit. For this reason, manufacturers will sell less, and produce less. The importance of a viable

Consumer Credit System cannot be overemphasized. This paper hypothesized that certain identified factors

militate against the development of a strong Consumer Credit System in Nigeria. It examined and analysed these

challenges and exposed their negative roles in the development of a strong Consumer Credit System. It focused

on strategies that can improve consumer access to credit facilities and concluded that there is need for a

paradigmatic change to a global digital financial technology. It therefore made recommendations that can

challenge Nigerian policy makers to improve on, or evolve a stronger Consumer Credit System. This Paper also

explored that part of the consumer indebtedness story not explicitly related to credit based on real estate collateral,

related to stocks and bonds or other financial collateral, or used for business purposes. In other words, it examined

the domain of consumer credit. It is the saga of wealth creation in the middle class over time that has led to

demand for a wider range of financial products, including completely new forms of credit. It is also the story of

the evolution and regulation of financial institutions that have grown to supply those needs and desires. It is

simultaneously a tale of growth and competition among these financial providers and of the consequent pressures

to attract customers while reducing production costs. Today these competitive forces continue to contribute to

the ongoing revolution in product offerings. Innovations such as credit scoring, risk-based pricing, Automated

Electronic Credit Reporting Systems, product delivery through automated teller machines (ATMs) and more

recently the Internet, and virtually instantaneous access to billions of dollars of credit worldwide illustrate a

progression without an ending Human Satisfaction, as markets continue to evolve and as institutions plan and

implement new financial services and delivery mechanisms. Even periodic financial crises are unlikely to slow

this long-term trend. This paper was segmented into numbered sub-topics for clarity and objectivity.

INTRODUCTION

There is no specific statute in Nigeria that governs product liability litigation or credit facilities

. Lending in

Ajumogobia & Okeke, Nigeria Product Regulation & Liability. Accessed online on 19/11/2021

INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025

Page 8355

www.rsisinternational.org

Nigeria and indeed other developing countries like Ghana are usually faced with several unique challenges.

Nigeria for instance, is the most populous country in Sub-Saharan Africa with a World Bank population figure

of about 168.8 million people. Poverty in Nigeria remains significantly high with 65% of its inhabitants living on

below $1 daily. There is income inequality which gets worse by the day. This leads to differential access to

infrastructure and amenities. High unemployment rate renders personal income even more divergent. Less than

25% of Nigerians hold bank accounts and only a small fraction of that figure has access to credit facilities among

the banking population in Nigeria (Popoola, 2009)

. A 2015 World Bank data puts the total credit relative to GDP

in Nigeria to be 14.2 percent, while the world average is 128.8 percent. Countries like Switzerland, Thailand and

the United Kingdom have 172.6 percent, 151.3 and 134.1 respectively

. This shows that access to consumer credit

in Nigeria is extremely low. Poor access to banks and bank credits is however not purely a Nigerian problem. It

is a problem that is common with developing economies (Mckinsey, 2009). This, coupled with little or no

information to evaluate the credit worthiness of individuals, frustrates credit penetration. Even though the

Nigerian credit system is still evolving, Nigeria has an array of financial institutions with 22 commercial banks

according to a latest Central Bank of Nigeria’s latest figures as at 2021. It has about 949 microfinance banks,

over 100 primary mortgage institutions, discount houses, and a number of some special purpose financial

institutions, (Popoola, 2015). In spite of this, the percentage of adults with bank accounts is abysmally low as

earlier stated. Consequently, the percentage of Nigerians who have access to formal bank credit is also abysmally

low, making consumer credit inevitable for this group of Nigerians. The idea of consumer protection in Nigeria

is a fairly new phenomenon (Kanyib, 2005). Nigeria for instance has no Consumer Protection Act, no Consumer

Credit Act and no effective and functional credit bureaus

. These and more exist in countries like the United

Kingdom, United States and even South Africa. What Nigeria has is a Consumer Protection Council Act of 1992,

which provides more of an administrative framework for the regulation of consumer issues

. The practical

implication of this is that, there is no legal or regulatory framework for the operation of a formal Consumer Credit

System in Nigeria, so consumers are easily cheated while credit providers are reluctant to extend credit. The need

to develop effective and dynamic consumer credit laws to aid the highly industrious and dynamic Nigerian

population cannot be over emphasized. The few normative instruments like the Hire Purchase Act 1965, The

Money Lenders Laws in different states of the Federation and the Pawnbrokers Laws of different states, have all

lost touch with reality and some have almost completely out-lived their usefulness as consumer credit

instruments. Their provisions will be exposed here so as to help underscore their unsuitability. The sordid picture

painted above affects the women folk even more, due to the nature of the legal, regulatory, and socio-cultural

barriers in the Nigerian society. In this connection, the numerous challenges faced by female entrepreneurs can

also be linked to the purported inferior status of women in many African societies, their underestimation as

economic agents, as well as gender bias embedded in tribal and cultural norms.

Although a growing number of policies and programs are arising to address the needs of the growing number of

women business owners and their enterprises worldwide, access to finance is still the single biggest obstacle

facing women entrepreneurs particularly in Nigeria. It is therefore apposite to state that Nigerian female

entrepreneurs are particularly constrained by their weak financial base and lack of collateral. This work therefore

intends to examine the inability of Nigerians to access consumer credit and the factors, militating against their

access to credit facilities. A corollary of this is that, the state of consumer credit in Nigeria leaves much to be

desired. It is for this reason that attempt will be made to proffer reasons for the slow pace of consumer credit

development and growth in Nigeria and the challenges therein as well as the global trend for improvement.

As stated by Charles worth and Percy, the category of persons who may be deemed to be ultimate consumers has

been extended to include the user of the product as well as the person who comes into contact with it whether

incidentally or deliberately. From the definitions above, a consumer is not one who purchases goods and services

Mokutima Ekpo, Eni Alobo & Jacob Enyia, “Impediments to the Development of a Strong Consumer Credit System in Nigeria”

(World Journal of Social Science: University of Calabar, 2017) Retrieved on 15/11/2021

World Bank, 2017

Mokutima Ekpo, Eni Alobo & Jacob Enyia, “Impediments to the Development of a Strong Consumer Credit System in Nigeria”

(World Journal of Social Science: University of Calabar, 2017) Retrieved on 15/11/2021

http://wjss.sciedupress.com World Journal of Social Science Vol. 5, No. 1; 2018 Published by Sciedu Press 37 ISSN 2329-9347 E-

ISSN 2329-9355 consumer protection legislation. Accessed on 20/10/2021

INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025

Page 8356

www.rsisinternational.org

for trade or business purposes. This has been established in Overy v. Paypal (Europe) Ltd

and the definition

proffered by the Federal Competition & Consumer Protection Act, 2018 (FCCPA). What is Consumer Protection?

J.O. Enyia (Ph.D) defines the term consumer protection as the act of safeguarding the interests of consumers in

matters relating to the supply of products and services from fraudulent and hazardous practices as well as

environmental degradation. Consumer protection is all about the provision of appropriate and effective

mechanism to protect the pecuniary, health, environment, safety and security interest of all legal persons against

misleading, fraudulent and harmful business practices including manufacturing, trading, packaging, advertising,

distribution and selling of goods and services to the ultimate consumers

. The issue of consumer protection

became relevant since the reliance on the rule of caveat emptor (let the buyer beware) is no longer an adequate

protective measure because the principle is based on the premise or assumption that the buyer knows what he

wants and has knowledge necessary to choose wisely and has adequate contact with the sellers. Consumer

protection therefore is the practice of safeguarding buyers of goods and services and the public against unfair

practices in the marketplace. These protection measures are established by laws such as the FCCPA 2018,

NAFDAC, SON, etc. such laws are intended to prevent businesses from engaging in fraud or specified unfair

practices in order to gain an advantage over competitors or to mislead consumers. They may also provide

additional protection for the general public which may be impacted by a product or its production even when they

are not the direct purchaser or consumer of that product

DEFINITION OF TERMS

Consumer: Section 167 (1)

defines a consumer to include; Any person who purchases or offers to purchase

goods otherwise than for the purpose of resale but does not include a person who purchases any goods for the

purpose of using them in the production or manufacture of any other goods or articles for sale; or A person to

whom a service is rendered. The Black’s Law Dictionary defines a Consumer as a person who buys goods or

services for personal, family or household use with no intention of resale; a natural person who uses products for

personal rather than business purposes. A consumer is also defined as someone who acquires gods or services for

direct use or ownership rather than for resale or use in production or manufacturing. In Bowe v. SMC Elec.

Products

, the United States of America’s Court define consumer as individuals who purchase, use, maintain

and dispose of products and services. Consumer is a member of that broad class of people who are affected by

pricing policies, financing practices, quality of goods and services, credit reporting, debt collection and other

trade practices for which the state and federal consumer protection laws are enacted. All of the foregoing

definition centre on the consumer being the end user or the ultimate user of goods and services. The consumer’s

intention is to use such goods and services for his personal consumption or that of persons in his nearest vicinity

and not for further production or manufacturing purposes. See also the authority of Peraro Ex Rel. Castro V.

Chemlawn Services Corp.

Credit: Credit may be defined as a situation where one party provides resources to another party who has no

resources to reimburse the first party immediately or as agreed, but instead arranges to pay or return those

resources at a later date. It includes all forms of differed payments. The resources provided may be financial, or

they may consist of goods or services. The credit concept can be applied even in a barter economy. Broadly

speaking therefore, credit takes two forms: loan credit and supply/sale credit. Loan credit is credit extended by

payment of money to the debtor, or to a third party at the debtor’s request, upon terms that the debtor is to make

repayment

. Supply credit is simply the deferment of the debtor’s obligation to pay the price of goods or service

supplied/rendered. In practical terms therefore, loan credit involves repayment of an advance while supply credit

involves deferment of payment (Essien, 2012). The English Consumer Credit Act 2006 defines credit as a cash

(2012) EWHC 2659 QB

http://dx.doi.org/10.5430/wjss.v5n1p36 Accessed on 21/11/2021

http://wjss.sciedupress.com World Journal of Social Science Vol. 5, No. 1; 2018 Published by Sciedu Press 36 ISSN 2329-9347 E-

ISSN 2329-9355 Accessed on 21/11/2021

The Federal Competition and Consumer Protection Act, 2018

INC, 935F Supp. 1126

692F Supp. 109

Mokutima Ekpo, Eni Alobo & Jacob Enyia, Supra

INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025

Page 8357

www.rsisinternational.org

loan and any other form of financial accommodation where the debtor is allowed time to pay. It includes a hire

purchase agreement. In practical terms therefore, loan credit involves repayment of an advance while supply

credit involves deferment of payment

. The English Consumer Credit Act 2006 defines credit as a cash loan and

any other form of financial accommodation where the debtor is allowed time to pay. It includes a hire purchase

agreement and other financial agreements.

Consumer Credit: The Black's Law Dictionary (Black, 1990) defines it as short-term loans given to individuals

for the purchase of consumer goods and services

. It can also be defined as a short-term loan made to enable

people purchase goods and services primarily for personal, family or household purpose. It is a short and

immediate term loan used to finance the purchase of commodities for personal consumption.

The originator of a credit is the person or company who originally extended the credit, while the holder is the

individual or business who obtained the debt at a discounted price in order to collect payment at a subsequent

time. A car dealer who gives a car to a customer on credit is an originator of credit. Such credit facilities are

sometimes. assigned to banks and other financial companies who become credit holders. Two types of companies

are actively involved with consumer credits

. The first is the small loans company. This type of company as an

originator gives loans to consumers directly, because it has direct contact with them. The second is the sales

finance company, which purchases and holds consumer installment debts. These companies play vital roles in

empowerments and economic development thereby ensuring a credit economy. that citizens can enjoy improved

living standards, good housing systems, and holidays. A credit economy in Nigeria will simply stimulate a lot of

buying and selling

. This will in turn increase productivity, boost employment by the production companies and

this will affect the economy positively as there would be more savings. In simple terms, consumer credit is debt

that is taken on by individuals who aim to expend the monies immediately. A person who borrows money to buy

a bicycle or use a credit card to pay for a meal, is indulging in consumer credit. In other words, the operating

intention for the debtor is to consume. The loans may be supplied by lenders in the form of sales credit. Consumer

credit usually comes with a higher rate of interest than business loans. Most traditional forms of consumer credit

like car loans have standard monthly payment and fixed repayment schedules with fixed or varied interest rates.

Consumer credit enhances consumer satisfaction as it enables consumers to enjoy services of goods sooner than

they otherwise would have done. It enables consumers who are unable to save money for the purchase of goods

and services, to enjoy such goods and services if they are able to keep their contracts with their creditors. The

originator of a credit is the person or company who originally extended the credit, while the holder is the

individual or business who obtained the debt at a discounted price in order to collect payment at a subsequent

time. A car dealer who gives out a car to a customer on credit is an originator of credit. Such credit facilities are

sometimes assigned to banks and other financial companies who become credit holders. Two types of companies

are actively involved with consumer credits. The first is the small loans company. This type of company as an

originator gives loans to consumers directly, because it has direct contact with them. The second is the sales

finance company, which purchases and holds consumer installment debts. These companies play vital roles in

empowerments and economic development thereby ensuring a credit economy so that citizens can enjoy

improved living standards, good housing systems, and holidays. A credit economy in Nigeria will simply

stimulate a lot of buying and selling. This will in turn increase productivity, boost employment by the production

companies and this will affect the economy positively as there would be more savings. In simple terms, consumer

credit is debt that is taken on by individuals who aim to expend the monies immediately. A person who borrows

money to buy a bicycle or use a credit card to pay for a meal, is indulging in consumer credit. In other words, the

operating intention for the debtor is to consume. However, if one borrows money for investment purposes, to

commence a business enterprise, or to acquire a home, such a person is not using consumer credit. The whole

point of consumer credit is to consume something today that you would otherwise not have been able to afford

until later.

E. Essien, Law of Credit and Security. (Uyo: Toplaw Publishments Lid, 2012) p. 4

H.C. Black, Black's Law Dictionary, (West Group, 6th ed., 1990)

B.B. Kanyib, Consumer Protection in Nigeria, Law. Theory and Policy. (Rekon Books Ltd., 2005) p.2

B. Ailhola, Law Refirm in a Military Era: Nigerian essays in jurisprudence. (Lagos, M. 1. J. Puh. Ltd, 1993). p. 199. Batuta,

1. (1929). Travels in Asia and Africa, 1325-54. London, cited in Essien, op.cit at p. 15.

INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025

Page 8358

www.rsisinternational.org

BACKGROUND TO CONSUMER CREDIT IN NIGERIA

As already noted, the need for consumer credit facilities arise from the inability of the consumer to make

immediate payment for goods and services he needs either personally or for his family’s use

. This was seen as

a sign of poverty. According to Essien, this was why the debtor in olden days was looked down upon the world

over. He adds that from the 18th and 19th centuries, there were moral prohibitions with regards to the principles

of credit and dislike for it was expressed in moralistic tones, especially by the wealthy and middle classes.

Proverbs like “Better to go to bed without supper, than to rise in debt”, or “He that borrows must pay again with

shame and loss”, etc. aptly exemplify the prevailing attitude towards consumer credit facilities at the time. With

the advent of Christianity, the Holy Bible was immediately employed in this unwholesome practice of

discouraging consumers from taking credit facilities. Certain verses in the Bible were thus quoted out of context;

“…you shall lend to many. But you shall not borrow” “…it is more blessed to give than to receive”, the rich rules

over the poor, and the borrower is servant to the lender”. These negative adaptations of biblical verses coupled

with the very popular adage that the hand of the giver is perpetually on the head of the receiver seem to have

influenced the negative attitude towards consumer credit in Nigeria at the time. The early forms of credit involved

the borrowing of some commodities which were used as currency at that time. The local currencies in existence

in Nigerian communities before the European trade is said to have consisted of brass rods, manilas, copper wires

and cowries (Faloa, 1987). Manila for instance is speculated to have been first introduced into Nigeria in the 15th

century by the Portuguese traders (Ekpo, 1979). The English traders who came later just adopted this mode of

payment. It seems cowries were in use in Nigeria long before the Manila (Batuta, 1929). According to (Hiskett,

1966) it was the Malian cowries that must have found their way to Nigeria. Gin, gold dust, tobacco, salt and iron

bars were also used in credit transactions in Nigeria. Though iron bars were more favoured in Southern Nigeria.

British currency was introduced into Lagos (Nigeria) in 1881 and in 1904, the importation of cowries into Nigeria

was abolished. In 1948, the Nigerian Legislative Council stopped the exchange of Manilas for British currencies.

After this, the British currencies became the only means of credit transactions until 1973 when the Naira and

Kobo was introduced by the Nigerian government. (Essien, 2012). In the Southern part of ancient Nigeria, the

Ekpe and the Ekpo societies were used to enforce credit obligations. These societies were so effective such that

some European traders were induced to join the Ekpe society in the 19th century. This enabled them to give credit

to African traders with the confidence that it could be recovered (Holman, 1840). As the use of consumer credit

began to grow and became popular, there was also a change of attitude towards its use and role in the credit

system generally. Today, the view of consumer credit as a system for the poor is no longer popular. In a more

commercial historical perspective, when banking commenced in Nigeria at about 1892, the need to develop

consumer credit products was not imperative as few banks then were in operation

. The deregulation of the

financial sector gave room for the formation and licensing of numerous new command and merchant banks. With

this came aggressive competition among the commercial banks, which finally led to the introduction of new

consumer credit products in Nigerian commercial banks.In spite of this, consumer credit remained nascent and

undeveloped with consumers being unsatisfied with the credit products introduced in the financial market

(Monye, 2003)

HOUSEHOLD DEBT AND THE ECONOMY

Contrary to what the literature on the linkage between debt accumulation and hidden economy suggests, this

paper advocates that the two relationships, tax-hidden economy size and inflation-hidden economy size, have to

be inverse because it is the relative, not the absolute hidden economy size that matters, and it is this that should

be the yardstick for empirical work on the subject

. Without question, the post–World War II decades have

witnessed many significant changes to the American economy; not the least of them is the ongoing revolution in

the money management habits of the large and growing middle class. In the early years after the war, the range

of financial decisions for most people seems simple by today’s standards: what proportion of savings to hold in

Mokutima Ekpo, Eni Alobo & Jacob Enyia, Supra.

Mokutima Ekpo, Eni Alobo & Jacob Enyia, Supra

Mokutima Ekpo, Eni Alobo & Jacob Enyia, Supra.

Gerasimos T. Soldatos, An Anti-Austerity Policy Recipe Against Debt Accumulation in the Presence of Hidden Economy. (Asian

Economic and Financial Review, 2016). Accessed on 17/11/12

INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025

Page 8359

www.rsisinternational.org

government savings bonds versus deposits, how to choose depository institutions to open savings and checking

accounts, and where to obtain loans, either for split-level homes in the developing subdivisions or for the new car

models finally available after the end of wartime restrictions

. Most of these financial decisions required

relatively little investigation or intellectual effort for most people.

By contrast, today the variety and use of financial services have grown sufficiently to become a staple of

discussion, even on talk radio and at lunchtime and evening seminars. Stock markets, mutual funds, exchange

traded funds, variable annuities, IRAs, 401(k)s, 529s, tax-exempt bonds, defined benefit and contribution pension

plans, health savings accounts, universal life insurance, and even formerly exotic products such as put and call

options now are commonplace discussion topics

. On the household liability side, consumers must contend with

adjustable-rate mortgages, balloon mortgages, subprime mortgages, home equity credit lines, other secured loans,

unsecured credit lines, other unsecured loans, and even thin plastic devices that access credit accounts usable

world-wide. Today it is possible to transact in these and other asset and debt instruments not only at the office of

a financial institution or broker, in person or over the telephone, but also impersonally in one’s own den on a

computer or almost anywhere else using a computer or cell-phone wireless link. Consumer sector financial

management even became a staple of the nightly television news during the financial crisis of 2008–2009. For

some people, the understanding and management of personal finances has become a hobby; for others, it is a

nightmare.

Within the breadth of new and redesigned consumer financial products and services, none is more ubiquitous (or

more controversial) than the various types of products known as consumer credit. Obviously, loans of various

kinds to finance real estate purchases are common today (and even provoked the worldwide financial crisis

beginning in 2008), but even more common are smaller extensions of credit. Specifically, the term consumer

credit as used here refers to all kinds of credit employed by individuals that are not collateralized by real estate

(that is, not home loans and home equity credit, which are mortgage credit) or by specific financial assets such

as stocks and bonds and that are not used for business purposes. Typical auto loans, home improvement loans,

appliance and recreational goods credit, unsecured cash loans, mobile home loans, student loans, and credit card

credit all fall into the consumer credit category.

From its origin as a small grouping of financial services used typically by the lower- to middle-income segments

of the middle class between the world wars (and actually restricted by federal controls during World War II and

the Korean War), modern consumer credit has grown so much that virtually all consumers are users at some point

in their financial lives; certainly, almost all are at least aware of its benefits and risks. What has caused consumer

credit to move so far into the mainstream? Providers of financial services would probably answer with something

about the demands of customers.

Consumers would probably reply about the growth of useful product offerings by suppliers. Both would be right,

of course, since it always takes both demand and supply to make a market. But these are simple answers, and,

like so many easy responses, they are only part of a larger, more interesting, and arguably more important story.

It is a truism that markets develop where demand meets supply, but consumer credit has grown so much, and the

available financial products are now so numerous and their distribution system so extensive and diverse, that

there must be a lengthier tale.

CHALLENGES AND PROSPECTS

Credit Access in Nigeria is a business-oriented economy, with an estimated 37 million micro, small and medium-

sized companies (MSMEs). The entrepreneurial economy contributes roughly 48 percent of the country’s gross

domestic product and employs over 60 million people, making Nigeria the largest economy in the sub-Saharan

region. Although these numbers look promising, few businesses are successful in obtaining loans from financial

institutions. According to The Credit Crunch, a joint report by the Central Bank of Nigeria (CBN) and the

International Finance Corporation (IFC), of the 840 MSMEs surveyed in Nigeria, only 31 percent successfully

Gerasimos T. Soldatos, Supra

Sean M. Davis, ‘Household Debt and the Economy’ online material; Accessed on 18/11/2021

INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025

Page 8360

www.rsisinternational.org

obtained a loan from a bank or microfinance institution. MSMEs are often burdened by a myriad of challenges

like multiple taxation systems and high costs. The risks associated with credit access in Nigeria stem from many

causes

While the fintech sector is relatively new and still developing, there are challenges, which must be addressed to

enable full integration of fintech services into the financial sector and optimise benefits for consumers.

Some of the challenges faced by the new sector are:

Regulatory factor– Although Regulators have shown some level of support for innovation and digitization by

enacting several guidelines, the reality on ground is that Regulators are still trying to strike a balance between

supporting innovation and ensuring financial stability and consumer protection. Recently, the CBN issued a

regulation prohibiting financial institutions from transacting on Cryptocurrency. Again, very recently the

Securities and Exchange Commission issued another policy, restricting unregistered companies from providing

platform for trading in securities in Nigeria. While these policies have sparked several reactions among

stakeholders in the sector, from the Regulator’s perspective they are necessary to maintain a balanced and stable

financial system

To address this challenge Regulators will need to be open to dialogues with innovators on how existing

regulations can support innovation and how their products can fit in with Regulations. Regulations should also

take into account the fact that the playing field may sometimes be uneven. For example, if Fintech are to have

the same capitalisation requirements as banks, this might be prohibitive. Regulators must also build their capacity

and understanding of the risks that comes with innovation and develop knowledge on how to effectively manage

same while allowing fintech companies to thrive.

Regulators should also explore regulatory sandboxes that allow fintech and other innovators to conduct live

experiment in a controlled environment under regulatory supervision. Interestingly, the CBN recently released

its exposure draft of regulatory framework for sandbox operation. The CBN also included Regulatory sandbox

in its circular for approved licence categorization for payment system operators in Nigeria. From the Circular,

fintech starts-up and industry innovators can easily obtain regulatory sandbox licence as there are no capital

requirements to be entitled to same.

Low level of financial literacy– There is the wide perception among the unbanked and undeserved that they do

not need the financial products provided by banks. A large number of persons in Nigeria, would rather resort to

informal lending from family and friends than approaching a bank for a loan. Also, Savings in Nigeria generally

has a very traditional look such as hiding the money in a safe place at home, or using informal saving clubs

commonly called osusu. These challenges have made it difficult for fintech companies providing lending and

saving services to break into the sector. Although we have seen players introducing digital savings tools to bridge

the gap between formal and informal savings such as Piggyvest in Nigeria and Jumo, South-Africa, there is still

the need to increase the level of financial literacy to access a larger pool of consumers

Lack of consumer trust – Research has shown that people still do not fully trust fintech companies and this is

majorly driven by fear of the unknown, limited Regulation and aversion to sharing of personal data. A lot of

consumers are struggling to catch up with the pace of the fast growing fintech sector. Fintech companies will

need to work hard to demonstrate both its social corporate and corporate governance credentials . Since major

traditional banks have been able to garner a good level of trust over the years, strategic partnership with banks

can help Fintech with the trust level needed to scale. Also, the CBN recently issued four approved licence

categorisation for payment system operators and imposed certain recapitalization requirements that must be met

by new and existing participants in the fintech payment sector. For example, mobile money operators (MMO)

are required to have a minimum share capital of two billion naira. The circular also provides that only MMO are

A.T. Popoola, “The Challenges of a Strong Credit System in Nigeria” Credit Awareness. (2010) Retrieved from

http://www.creditawareness.nigeri.com/nes-sph.p Accessed on 17/5/2023

A.T. Popoola, Supra

INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025

Page 8361

www.rsisinternational.org

permitted to hold customer funds. Further, collaboration between licensed payment companies, banks and other

financial institutions must be with CBN approval. This development will foster a more credible and stable fintech

ecosystem which would in turn build trust in the sector

Lack of Collateral: To secure a loan from financial institutions, collateral is one of the prerequisites. This

protects the lending bank in case the borrower defaults on the loan. For MSMEs looking for small business loans,

inadequate collateral is a major reason for not receiving loans. Secure land is the most common collateral for

banks in Nigeria, but only 5 percent of the land is formally titled, mostly consisting of urban land or commercial

farms. Low-income households own a large portion of rural land, which does not have validated titles. This acts

as a major obstacle for microenterprise owners and low-income households that are keen to obtain affordable

credit from formal financial institutions. Many analysts argue that the provisions and implementations of the

Land Use Act of 1978 are largely responsible for limiting the authenticated titling of rural land. Since banks ask

for land or buildings as collateral in 98 percent of loan applications, low-income loan seekers remain unable to

secure loans

But efforts are being made to allow greater use of moveable and reputational collateral in bank loans. The CBN

recently established the National Collateral Registry to improve credit access in Nigeria. Additionally, it is

supporting the development of a modern credit reporting system in Nigeria with backing from the World Bank.

No Awareness of Credit Reporting System: Many borrowers are unaware of their credit history, and despite

having a good credit record, they are reluctant to apply for loans simply because they do not meet the collateral

requirements. This becomes a concern for borrowers, particularly rural dwellers looking for microloans for their

small businesses. They have been reluctant to approach banks for loans, which in turn has slowed down the

entrepreneurial growth of small businesses that may have had a promising growth but could rarely take off due

to a lack of financing. The country remains a part of a large-scale campaign, the Credit Reporting and National

Collateral Registry Education and Awareness Campaign. The campaign’s goal is to create awareness of credit

tools through the collateral registry and the credit reporting system and is a collaborative initiative of the CBN

and IFC. Such efforts promise to promote responsible lending and borrowing among those borrowers.

CBN has also teamed up with other stakeholders to promote the Credit Awareness campaign. The campaign

promises to educate consumers on rural financial services and shares information on issues that will improve and

allow greater appreciation of the rights and responsibilities of microfinance institutions and other financial

institutions, along with their clients and stakeholders. Subsequently, Credit Awareness Nigeria plans on launching

another public campaign on credit awareness and financial literacy to bring together microfinance practitioner

institutions, development partners, stakeholders and clients of microfinance institutions

No Interaction with Financial Institutions: Of those surveyed, less than a third of MSMEs successfully

acquired loans for their businesses. A reason for this is that rural borrowers do not have an established relationship

with banks. Due to their lack of interaction with financial institutions, rural borrowers fail to understand the

conditions of getting a loan or the required loan application procedures. This also causes problems for rural

dwellers who do not have a credit history, resulting in borrowers resorting to informal savings and reinvested

profits.

The need for a potent consumer credit system cannot be overemphasized: It would stimulate economic

growth, as consumer credit and Gross Domestic Product (GDP) growth. A strong consumer credit culture and

banking system would undoubtedly strengthen financial intermediation as this enhances the capacity to mobilize

and deploy savings to critical sectors of the Nigerian economy

. The challenges of evolving a strong consumer

credit system in Nigeria are multifarious and multidimensional. The consumer credit system in Nigeria is largely

under-developed. For this reason, only few Nigerians like those in the upper class can access such facilities, and

A.L. Krulick, Consumer Credit Protection Act; Laws protecting Consumer Rights. (2009) Retrieved from

http://www.deb.org/credit/yourconsumer.rightsprotection-act2014 accessed on 17/5/2023

A.L. Krulick, A. L., Supra.

A.L. Krulick, Supra.

N. Monye, Law of Consumer Protection. (Ibadan. Spectrum Books Ltd., 2003) p.11

INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025

Page 8362

www.rsisinternational.org

for selected items only. Moreover, the extra-judicial methods usually resorted to for debt collection and recovery

discourage prospective customers. Weak attempts by the government has been stymied by several factors ranging

from weak and obsolete laws, cultural barriers and at times complete lack of the legal infrastructure to back up

governmental policies and guidelines. In spite of the enviable array of financial institutions in Nigeria, extension

of consumer credit to Nigerians is still very low. The question that may be asked here is why this is so? Popoola

lists the factors impeding the development as low income, unreliable macroeconomic statistics, high roles and

weak rating systems for individual and corporate organizations. According to him, most hanks in Nigeria prefer

to grant credit to the elites and highly placed individuals. He concludes that if the credit system is going to help

in alleviating poverty, then the banks and other credit organizations will have to make themselves accessible to

the less privileged in the society by making their rates affordable and conditions for accessing credit less

cumbersome. These observations have undoubtedly highlighted some of the impediments to consumer’s credit

in Nigeria.

The Absence of a Concise Consumer Credit Act and other Consumer Credit Protection Laws concise. The

Nigerian consumer needs more protection than what is currently the case. Nigeria does not have unified,

comprehensive and recognizable law for the protection of consumers like a Consumer Credit Act. This means

that there is lack of effective regulation, control and monitoring of matters relating to consumer credit. Thus,

different laws like those already discussed exist and operate as consumer credit regimes. There is, therefore, need

for a unified legislation like a Consumer Credit Act. This was hitherto the case in England before the emergence

of the Consumer Credit Act 1974 which was later replaced by the Consumer Credit Act 2006. The Act swept

away the piecemeal legislation/regulation and replaced them with a single code (Lowe & Woodroff, 2008).

Equally, the South African Consumer Credit Act 2005, eliminates the piecemeal approach to consumer

transactions in South Africa. It encourages fair and responsible credit transactions under section 4 (1) and creates

the National Credit regulator to enforce compliance with the Act, in addition to the regulation of activities of

credit bureaus in sections 43 and 70. The United States Consumer Credit Act 1968, standardizes and encourages

honest credit transactions. In addition, the United States has other interesting consumer credit laws like the Fair

Credit Reporting Act which attempts to ensure accurate reporting of consumers' personal information

and the

Fair Debt Collection Practice Acts 1996. The provisions of the latter are interesting because what it prohibits are

common occurrences in Nigeria, By this Act, a debt collector may not without prior and express consent of the

consumer to the lender, contact or discuss the debt issue with the consumer at places and times considered to be

inconvenient to the consumer. It prohibits debt collection through harassment, abuse, threat of violence or through

unfair and unconscionable means. There are similar legislations in Nigeria and so Nigerian consumers grapple

alone with all manners of difficulties. What Nigeria parades in this direction is a Consumer Protection Council

Act 1992. What could have been a National Consumer Credit Regulatory Commission Act is still pending in the

National Assembly since 2009. This dilemma may have informed the CBN to attempt to fill the gap in spite of

the lack of legislative support. Thus in 2010, it introduced supervisory frameworks for Commercial and Micro-

finance Banks. It prohibited universal banking and introduced tiered banking in an attempt to shield bank deposits

from broad risks. In 2011, it introduced Islamic banking which is a non-interest financial service. Currently, the

Consumer Protection Council which has no mandate to deal with Consumer Credit issues, forwards all unresolved

financial complains to the CBN for resolution

. It has also introduced measures to address card and Automated

Teller Machine (ATM) fraud. Consequently, all financial institutions in Nigeria are mandated to have consumer

help desks to handle consumer complaints within a specified period and to give periodic reports to the CBN.

Nigeria needs to salvage the CBN from the crisis management it has voluntarily undertaken, so it can concentrate

on its traditional roles.

Lack of Effective Credit Bureaus: No economy can witness serious apsurge in consumer credit without a strong

and reliable credit information sharing platform. The observation by Popoola that banks and other financial

institutions only grant credit to the elites while ignoring the less privileged members of the public raises the issue

A.T. Popoola, "The Challenges of a Strong Credit System in Nigeria Credit Awareness, (2010) Retrieved from

http://www.creditawareness.nigeri.com/nes-sph.p. Accessed on 5 June, 2025

A.L. Krulick, Consumer Credit Protection Act, Laws protecting Consumer Rights, (2009) Retrieved from

http://www.deb.org/credit/yourconsumer.rightsprotection-act2014. Accessed on 5 June, 2025

E.E. Eja, & E. Bassey, Money Lending Law and Regulation of Consumer Credit in Nigeria." (2010) Retrieved from

http://www.ajoliinfor/index/ph/.naujij/articledownload82406/72558, accessed 5 June, 2025

INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025

Page 8363

www.rsisinternational.org

of the lack of an information data-base, The Central Bank of Nigeria (CBN) in an attempt to solve this problem

established a Credit Risk Management System (CRMS) or Credit Bureau (CB) and provided guidelines for its

operations in 2008. This was supposed to gather information on consumer's credit history from various sources

so as to assist in assessing the credit of borrowers

. The availability of an effective CB encourages responsible

financing, improved access to credit with lower interest rates for good turnovers. It reduces information

asymmetries between lender and borrower and improves credit risk monitoring.

The presence of a viable CB tends encourage consumers access to available credit facilities. This is being

suggested by a World Bank survey based on 5.000 firms in 51 countries. This shows that 49% of small firms

reported high financing constrains in countries without a CB and 27% in countries with CB. Also, while only

28% had a probability of obtaining a bank loan for a small firm in countries without a CB, 40% had such

probabilities in countries with CB. A functional CB provides an industry wide information repository on the

credit profiles of consumers, thus enabling credit providers to make informed decisions. This means that with a

CB one does not have to be formally employed or have physical assets as collaterals before being able to assess

credit facilities and the incidences of failure and nonperforming loans which led to the collapse of many banks in

Nigeria would be reduced

. insists that the CBN must put enabling legislation in place to enforce its guidelines

so as to reduce the incidences of nonperforming loans.

The CB in Nigeria is plagued with the problem of lack of legal framework to enforce its guidelines or its

operations. A bill for an Act to provide for such a framework is still pending in the National Assembly since

2009. Information collection from consurners in Nigeria may encounter constrains if not backed by law.

Commenting on this, Poopola

emphasized that Nigerians are highly and naturally skeptical about giving out

their personal information. Such enquiries may be mistaken as information for taxation or for diabolical purposes.

The CBN's guidelines in 2008 which made consumer's consent necessary before his personal details are submitted

to a CB, seemed to have. worsened the issue. This is so because there is no law which makes it mandatory for the

consumer to give the information when properly sought. There is therefore the need to create strong, useful and

effective credit bureaus to act as databanks for information on consumers. This will reduce incidences of bad

debts from bank portfolios and consequently incidences of collapsed financial institutions. It will also make

access to credit less cumbersome and thus more attractive to consumers

Lack of a Standardized National Identification: Consumer credit. flourish in environment where the

identification of the consumer is problematic Consumer identification is key to consumer credit transactions.

Lenders need to know who they are dealing with, Nigeria is only currently experimenting with a uniform

identification of her citizens

. Previous attempts had been unsuccessful and one hopes that this one will achieve

its utility. Currently, various forms of identification of customers are employed by lenders. Identity cards from

employers, international passports, permanent voters cards and drivers licenses are all used. Banks even go to the

ridiculous. of asking for physical description of residential houses and production of utility bills. This could have

been unnecessary with a standardized and recognizable identification system,

Illiteracy: In spite of the fact that a large percentage of Nigerians are highly literate, Nigeria still has a huge

percentage of illiterate people, this could induce unconscionable lenders to exploit their illiterate customers. This

set of consumers could be made to sign documents which are one sided and which impose undue burden on

them

. Therefore, Nigeria needs to address its illiteracy problem if it must advance with consumer credit. Sadly,

the illiteracy rate in Nigeria is still high in spite of numerous government programmes to encourage Nigerians of

all strata to go to school. In this connection, Nigeria needs to improve on the illiteracy figure, the figure given by

A.T. Popoola, supra

B. Komolafe, "Legislation Hinders credit Bureaus Momentum Vanguard, Sept. (2009) Retrieved from

http://www.crservicespic.com/legislation-hinders-credit. Accessed on 5 June, 2025

A.T. Popoola, supra

M.C. Okany, Nigerian Commercial Law. (Africana First Publishers Inc., 2009) p. 634

E. Ekpo, "Nigeria and the Evolution of Money" CBN and Dept. of Antiquities, (Lagos, 1979) p. 59.

T. Faloa, Nigeria and Britain: exploitation or development (London and New Jersy, Zed. Books Ltd., 1987) p. 14. Hiskett,

M. (1966). "Materials Relating to the Cowries Currency of the Western Sudan", Vol. xxix, Bulletin of the school of Oriental

and African studies, pp. 339-3666 cited in Essien. E. op.cit.

INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025

Page 8364

www.rsisinternational.org

the Nigerian Acting Minister of Education in 2015 is shameful and a sad commentary on the state of education

in Nigeria. The government needs more political will in order to actualize its numerous educational programmes

meant to improve the literacy rate in Nigeria

DRIVING GLOBAL FINANCIAL TECHNOLOGY

Globally, governments and financial institution around the world have been driving the principle of financial

inclusion, which aims at getting financial services to the unbanked and the underserved population. While,

financial inclusion is considered necessary to reduce poverty and accelerate economic growth, it is estimated that

globally, about 1.7 billion adults are unbanked and this can be as a result of several factors ranging from low

financial literacy, lack of access, affordability to lack of consumer trust. In 2012, The Central Bank of Nigeria in

pursuing its goals for inclusion introduced the cashless policy which aimed to discourage use of physical cash for

transactions. This policy provided an enabling environment for the growth of fintech companies providing mobile

enabled services and also enhanced equal access and use of financial products for the unserved and undeserved

population. Further to its drive for inclusive finance, the Central Bank of Nigeria in 2018 issued a National

Financial inclusion strategy where it outlined its implementation approach and plan for distribution of financial

services.

One fact that the past few years have revealed is that technology and digitization are a major tool for stimulating

financial inclusion. This is more so for Nigeria, considering the high penetration rate of mobile phones in the

country including rural settlements.

To achieve a fully banked Africa, it has been intimated that the goal should be to speed up the convergence

between the industry’s various players to stimulate financial inclusion. This convergence requires Regulators to

play an active role and the CBN appears to understand this fact. Initially, Regulations in Nigeria do not allow

non-financial institutions to provide financial services. This has been reviewed and amended with the introduction

of the Guidelines on Mobile Money Services in Nigeria and the Guidelines for Licensing and Regulation of

Payment Service Bank (PSB). For the purpose of this article, the major point of interest for both Guidelines is

that they allow a convergence of industry players from fintech, banking and telecommunication sector providing

mobile money services and digital bank services to accelerate financial inclusion

Following the introduction of the Mobile Money Guideline a total of 21 mobile money operators’ licences have

been issued out to 16 non-bank operators and 5 bank operators. Tech giant, MTN is presently a mobile licence

operator.

Also, under the PSB model, 3 licenses have been issued, two to subsidiaries of telecommunication companies.

Considering the large subscription base of the telcos and their ability to reach an additional layer of customers

that traditional bank ordinarily could not reach, introducing telcos to financial services is a brilliant move to

achieve financial inclusion. These telcos are well equipped to easily penetrate and make financial products

accessible to the unbanked. Also, with these arrangements, a lot of data about the unbanked Nigerian population

will flow into the country’s banking sector, making it easy for banks to target this population

USING ARTIFICIAL INTELLIGENCE AND ADVANCED ANALYTICS FOR

FINANCIAL INCLUSION

Most discussions on fintech focuses on how mobile payment can help drive financial inclusion. However, while

the payment sector is the largest and most developed Fintech sector in Nigeria, Fintech covers the entire spectrum

of financial services right from payments to investments, loans, insurance, and savings. All of these sub-sectors

play a key role in stimulating inclusion. Some of the requirements for financial inclusion are quick and easy

access, simplification and affordability. A digitized approach to lending meets these requirements.

A.T. Popoola, supra

Eddie Wen Morgan ‘’How Digital is Changing the Trading Experience and What it Means for Market’’ https//events-

risk.net/digitalmarketsglobal/agenda?utm.

Eddie Wen Morgan, Supra

INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025

Page 8365

www.rsisinternational.org

Under the traditional approach to credit scoring, there are certain requirements that create a barrier to access to

credit by non-salaried customers and small companies such as requests for salary slips, corporate balance sheets

etc. Artificial intelligence and advanced analytics for credit scoring will help to broaden the pool of credit worthy

customers therefore allowing access to credit for those customers who ordinarily would not have access under

the traditional credit scoring system. For example, Jumo, a platform for mobile network operators and banks

which provide digital lending services, uses advanced data engine and runs machine-learning algorithms to build

increasingly accurate credit profiles. Another example is Fair money, active in Nigeria, which uses artificial

intelligence technology to leverage data from customers’ mobile phones to help identify and segment their risk

profiles. With these technologies, credit facilities are made available to an additional layer of customers

Prospect for Fintech Sector and Consumer Credit in Nigeria:

There is a growing interest in the fintech sector in Africa, majorly due to the large market size and the several

untapped opportunities that exist.

One major opportunity in the sector, going forward, is in the area of cybersecurity, KYC and AML solutions.

Mobile technology-enabled services do not require the face to-face interaction that takes place with traditional

banking and thus provide a more opaquer and anonymous experience which creates an enabling environment for

criminal activities. Therefore, fintech companies that can institute a meaningful KYC process, solve issues around

KYC, AML and provide secured app will feature prominently in the future.

Another opportunity for growth in Fintech, is the development of API Fintech Companies. The fintech space is

fast growing. As demand for fintech services increases and various subsectors expand, there will be a high need

for API companies that provide infrastructure which allows for seamless interaction and communication between

multiple technologies, programs, platforms or servers

DIGITISATION AND INCREASE IN CYBER ATTACKS

Following the emergence of Fintech companies, there have been heightened competition between banks and

Fintech as the former thrive to stay relevant and the latter struggle to scale. Most banks have digitally transformed

their existing operation and are entering into strategic partnership with Fintech for improved customer benefit

and experience. Many countries in Africa are experiencing a significant transformation of their financial sectors

as they move to digital financial services. However, on the heels of the increase in digitization is the threat of

cyber-attacks to the digital financial infrastructure.

These cyber-attacks which are a threat to financial stability, have gained momentum since the covid 19 pandemic.

In October 2020 in Uganda, major tech players were hacked for four days which disrupted service transaction. In

Nigeria at about same period, major techs were also hacked with airtime and data distributed to mobile users by

the hacker with the twitter account name “anonymous”. There were also allegations that several other banks were

hacked by this “anonymous”. Although these banks have dismissed the allegations as mere rumours, the increase

in cyberattack is a real time threat to stakeholders in the financial and technology sector. The question is how

best to organize protection across governments, financial authorities and industry and how to leverage resources

effectively and efficiently?

First, there is the need to build effective domestic relationships across the continent among financial authorities,

law enforcement and relevant government actors. A co-ordinated regulatory framework and procedure will go a

long way to curb the menace.

To strengthen cyber resilience, the Financial Stability Bank will need to develop a basic framework for

supervising cyber risk management at financial institutions. Governments and industry should strengthen security

by sharing information on threats and by creating financial computer emergency response teams (CERTs).

E. Essien, Law of Credit and Security. (Uyo: Toplaw Publishments Ltd, 2012) p. 4

INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025

Page 8366

www.rsisinternational.org

Harmonization of laws on cyber security would be helpful for efficient and effective information sharing and

cross border investigation and this can be easily achieved by signing and ratifying a common convention on

Cybercrime or integrating the provisions of the convention into local law. One good example of a comprehensive

legislation against cybercrime is the Budapest convention. Unfortunately, it has not been ratified by any Africa

Country. Also, the importance of educating consumers and businesses on cybercrime and how to protect

themselves cannot be overemphasized. Sensitization is key to combating cyber-attacks.

Nigerian Businesses Remain Hopeful: While there remain considerable concerns about inadequate credit access

in Nigeria, not all hope is lost. MSMEs overall have confidence in Nigeria’s economy and feel that economic

growth will improve in the next five years as financial lenders become more willing to lend to smaller-scale

businesses. Nigeria is one of the 25 priority countries to become a part of the World Bank Group’s Universal

Financial Access 2020 initiatives. The World Bank project aims to extend access to financial services to all adults

by 2020. Moreover, many projects are joining hands to ensure that the rural dwellers get credit access, with

programs being introduced to overhaul the obsolete land registration system and paving way for more credit

options for rural farmers

Credit Reporting: There is still need to increase the coverage of credit data suppliers (more Telcos, Landlords,

Retailers, Courts and Collateral Registry) and create more awareness about the use of credit reporting as an

enabler of credit in financial trans-actions and even measure of character in the fulfilment of specific roles or

positions. It can also be used as a form of vendor management. Many entrepreneurs do not know that they can

report credit defaults to credit bureaus to facilitate payments.

Credit bureau coverage needs to extend beyond 14%. The number of individuals and firms covered by the Credit

Bureaus needs to expand beyond current levels. Credit Bureau coverage in the US and UK is 100%.

Credit Scoring: Institutional support for the advocacy of credit scores as a key financial inclusion and credit/trade

financing product in Nigeria is critical to the credit framework. The use of credit scores has also become a trans-

border/regional agenda with far reaching opportunities to increase trans-border/ regional transactions for MSMEs,

especially with the recent AFCTA.

Lenders must increase internal capacity to use data and analytics to manage trade / consumer credit. Many

lenders/credit providers do not have adequate internal capacity to manage consumer lending using data and

analytics. The use of credit information to determine reputation can help in many transactions, such as

applications for bank loan, insurance, apartment rental, utility, post-paid phone service, etc. Fintechs are already

taking over this space.

Collateral registry usage must increase and all property registries linked to the registry. More financial institutions

need to lend on movable assets, and subnational collateral registries should be encouraged. Some Recent

Regulatory Reforms and Directives Relevant to the Achievement of Access to Finance Goals. The financial sector

has witnessed several regulatory reforms in line with the focus of the CBN. Some of these include, the cashless

policy,

1. Real Sector Financing Strategies: intervening in creative industry and facilitating exports.

2. Lower barriers to entry for mobile money wallet to attract more players: Ease in requirements. Telecoms

in the mix with super agency licenses. Deposit Banks to no longer require prior approval from the CBN

but notification before offering mobile money wallet services.

3. Boost availability of loanable funds in banks: set minimum loans to deposit ratio (LDR) requirements

to 65% to compel banks to lend to the real sector; reduced remunerable Standing Deposit Facility to

N2bn from 7.5bn to increase loanable funds and discourage idleness of funds.

4. Consumer Protection Guideline: Ensuring increased transparency and accountability in financial

transactions by financial institutions with consumers.

5. Improve provision of financial products through issuance of product specific prudential guidelines to

Deena Zaidi, Supra.

INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025

Page 8367

www.rsisinternational.org

increase efficiency and transparency in mortgage refinancing companies (the CBN also made mortgage

charges competitive rather than fixed); micro-finance banks; commercial, merchant and non-interest

banks; the guidelines were to eliminate restrictive pricing and promote competition by allowing market

forces to determine pricing.

6. Cross-Bank Loan Servicing: increased transparency and efficiency in tracking loan defaulters and

enforcing repayment. Unveil serial industry defaulters.

7. Increased transparency in the operations of Development Finance Institutions-seeking full disclosures

on subsidiaries.

8. Enhancing digital payments services: intensified efforts to in-crease digital transactions by compelling

use of digital channels for amounts above N500,000 ($1,633) and reduction of mer-chants service

charge rates on electronic transactions from 0.75% to 0.5%; New regulations on electronic payments

and collections.

Ajibola Alfred is founder and director, Research & Strategy at Straplan Advisory Limited. He is a policy analyst

with over 15 years’ experience in research and evaluation and strategic planning roles in private and public

institutions in Nigeria. His experience covers total quality management, asset management and financial markets,

export/trade development finance and commodities markets, project management, public sector reforms and

performance management. He recently served as reform leader and technical consultant at the Presidential

Enabling Business Environment (PEBEC) Secretariat between 2017 and 2019

He also powers www.jaraja.com.ng, an online platform that seeks to create market access for made-in-Nigeria

products by bridging the value-chain and eliminating unproductive middlemen. For more on financial

infrastructure and access, Nigeria's Long Term Economic Development Strategy: A Primer on Re-Orientation

and Coordination

CONCLUSION

From the foregoing, the central message of this presentation is that the time has come to effect a radical overhaul

of the legal regime governing the credit activities of banks and other financial institutions in Nigeria so that both

digital and Financial activities can be done cooperatively. The birth of General Assembly of Banks' Chief

Executives (GABCE) is timely, and it is hoped that GABCE will catalyse the process of reform.

The act of studying and proposing reforms in respect of the legal structures and institutions of the credit and

security administration process is very important. In 1991, there was a proposal for the formation of a Forum for

Commercial Court Users (FOCCUS) to act as a pressure group to catalyse the process of reform. Some Learned

Groups have also been working with the Association of Banks Lawyers (ABL) that has largely addressed

concerns identical with those that motivated the conceptualization of FOCCUS. These groups have also liaised

with the Equipment Leasing Association of Nigeria (ELAN) and the Money Market Association of Nigeria for

progress.

Furthermore, this paper understudied various researches and contributions to various seminars on sub-jects

related to credit and security administration. Having thus been involved in efforts to reform the credit

administration process, it is necessary to recommend such further assistance as GABCE may require in respect

of the concerns noted in this presentation.

Interestingly too, Fintech has disrupted the way traditional institutions provide financial services and how

customers interact with the financial sector. Innovative financial technologies have a pivotal role to play in

making financial products accessible to more people. While Fintech companies have been disruptive, they do not

have to be the death knell for banks. There is the need for collaboration between the banks and the fintech

companies to provide impactful new financial products that offers improved experience for existing consumer

and expand outreach to the unbanked and undeserved population. As much as Regulators are focused on driving

Ajibola Alfred, founder and director, Research & Strategy at Straplan Advisory Limited.

ibid

INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025

Page 8368

www.rsisinternational.org

inclusion, there is the need to understand that fintech is a viable tool that can help achieve massive results if well

regulated, developed and utilized.

Banks recently have been under serious attacks, there is the need to build effective domestic relationships across

the continent among financial authorities, law enforcement and relevant government actors. A co-ordinated

regulatory framework and procedure will go a long way to curb the menace.