Inadequate Credit Data and Policy Inconsistency, Bane of Nigerian Banks – ICAN President

ICAN President Dame Onome Adewuyi FCA has identified dearth of accurate data on the credit history of borrowers and inconsistency of government policies as the two major impediments to banking business in Nigeria.

According to her inadequate credit data constrains banks to take critical lending decisions without being completely sure of the credit behavior of borrowers over time. She opined out that bank lending in Nigeria still remains a very challenging business in spite of the battle by both regulators and operators to improve on credit history data in Nigeria.

On policy inconsistency she said that one policy detour or the other by the government could put lenders in trouble, pointing out that economic policy like devaluation of the currency would automatically turn a good loan to a bad one if the policy decision was taken at a wrong time of the asset conversion cycle of the transaction.

The president also said that the difficult operating environment for business in a developing country such as Nigeria often presents additional challenges that negatively affect banking and other businesses such that even when loans are given with proper due diligence and are adequately secured, they could still go bad.

She averred that the COVID-19 pandemic would definitely have negative impact on the portfolio of banks by the end of this financial year as many borrowers would find it difficult to repay due to economic lockdown. She dismissed the suggestion that startup small and medium scale enterprises (SMEs) do not obtain loans from banks, saying that most of them parade unviable projects without bankable feasibility studies and don’t have acceptable collaterals.

She insisted that SMEs and start-ups with bankable feasibility studies and acceptable collaterals do secure loans easily. She said that banks must lend with care because they are merely custodians of depositors’ funds which they must return to the owners with interest. The 56th ICAN President spoke to the media in Lagos.

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