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FEATURE STORY

Putting the tools in place for greater financial inclusion in Nigeria

August 20, 2015

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An improved credit reporting system aims to facilitate access to finance and increase financial sector efficiency in Africa’s largest economy.

Nigeria is one of eight countries in Sub-Saharan Africa that have established and licensed private credit bureaus to boost access to finance for low-income individuals and the small-scale business sector. For the credit reporting system to really have an impact on financial inclusion however, it is important that actors such as microfinance banks are linked into the system.

“We have a lot of work to do. Many of the microfinance institutions that we supervise are in the rural areas and don’t have access to internet or other technology, but what we have learnt is that we can set up sites in these places to make it easier for microfinance institutions to participate,” said Princess Warigon, a Lagos Deputy Manager at the Other Financial Institutions Supervision Department, OFISD, of the Central Bank of Nigeria, CBN. 

She was one of about 200 microfinance supervisors from the central bank that participated in a recent training workshop in Lagos, hosted by IFC. Since February last year the IFC and World Bank Global Practice on Finance & Markets is working with CBN and other key stakeholders to improve the functioning and performance of the credit reporting system by assisting in the development of the legal and regulatory framework, capacity strengthening of the oversight and supervision system, and the improvement of data submission and data quality. 

Nigeria introduced private credit bureaus in 2008, but credit bureau coverage is still very low at 4.9 percent of the adult population in 2014. The goal of the project is to facilitate access to finance for low-income individuals and micro, small and medium-sized enterprises, with a target of $5.1 billion in three years. 

“Credit for individuals is intended to enhance the quality of life. Credit for small enterprises is intended to enhance their possibility to do business, to grow and to prosper. That is possible when the right tools are in place, and the result is inclusive economic growth” said Luz Maria Salamina, IFC and World Bank Global Practice Finance & Markets credit bureau specialist and program lead in Sub-Saharan Africa. 

Nigeria is a priority country in the World Bank Group’s strategy to reach universal financial access by 2020. According to the latest Findex data, only 5.3 percent of Nigeria’s 96.6 million adults had borrowed from a financial institution in 2014. 

For more information, contact communications officer Anna Koblanck on akoblanck@ifc.org

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