- Bankers’ Committee’s step to make debtors pay is good, but it must be enforced
With the three licensed Credit Bureaux currently in operation, it remains anomalous that the issue of delinquent borrowers continues to plague the financial services industry. At least, that was the picture that emerged at the end of a two-day annual retreat of the Bankers’ Committee held in Lagos last month.
Speaking on the heels of the Bankers’ Committee’s decision to increase financial access to Nigerians, especially operators in the agricultural value chain and the Micro, Small and Medium-scale Enterprises (MSMEs), as part of the efforts to grow the economy and create more jobs, CBN governor Godwin Emefiele was quoted as saying at the retreat: “We do expect them (customers who take loans) to meet their own side of the bargain because we have a credit registry; their names will go into the black book if they don’t pay. If their names go into the black book if they don’t pay, it means they have ruined their credit ratings. This is because we also agreed at this meeting (the Bankers’ Committee) that we are going to raise the standard of credit bureau and credit reporting in this country.
He added: “We are going to raise the standard to a point where there will be credit scoring for people who take bank loans. And when you are scored low or you are scored zero, we are going to use the BVN to block you from having access to any finance in the Nigerian banking or financial services industry.”
Understandably, he spoke in the context of the apex bank’s plan to disburse N13bn to about 100,000 MSMEs before the end of February.
In a clime where loans are taken with little thought to repayment, we appreciate the fresh resolve by the monetary authorities to set things in order. We are only too aware of the fact that stern institutional measures, including the now familiar ‘name-and-shame’ tactics have failed to deter delinquent borrowers. In a number of cases, the exercise seems to have been deliberately bungled by the bankers for a variety of reasons. The new resolve could therefore not have come at a better time. Indeed, it seems to us a necessary step to building an economy that runs on credit.
We note however that mere affirmation of the relevance of the existing infrastructure of credit delivery is only one leg of the solution; ensuring their adoption across the board would appear even more critical. Having invested humongous resources in credit delivery infrastructure, particularly credit bureau services and lately the BVN, it seems only logical steps to ensure that the infrastructure are made to deliver on their mandates. This is our understanding of the resolve of the Bankers’ Committee – to have a permanent, institutional framework for credit service delivery in place, as obtains in other parts of the world. We see this as long overdue just as the challenge of linking and integrating the disparate data on individuals into a national data base has become an imperative.
We understand the infrastructure for what it is – a mechanism to assist the operators to have an objective basis for their credit decisions. A lot will still depend on how the operators conduct their day to day judgment calls. Having renewed their focus on the infrastructure for credit delivery, the bankers will also do well not to take the human capacity as well as moral hazard of operatives for granted.
