Digital lenders fret as CREDICORP disbursement hit N3.5bn
The Federal Government’s consumer credit scheme, anchored by the Nigeria Credit Corporation (CREDICORP), is gaining momentum with more accessible interest rates compared to the steep costs imposed by digital lenders.
While digital platforms often charge up to 10 per cent monthly and an annual percentage rate of 120 per cent, the government-backed initiative offers a significantly lower rate of four per cent per month through select financial institutions like Accion Microfinance Bank.
Though initially targeted at civil servants—who have received N3.5 billion within days—the program is expanding to the general public.
Analysts believe that this move could disrupt the digital lending landscape. “If CREDICORP successfully delivers affordable credit, digital lenders will either have to reduce their high rates or face losing customers,” said Martin Joseph, CEO of Edge Financial Services.
He added that these lenders could see their margins squeezed if they lower interest rates without reducing their exposure to risk.
However, some applicants have expressed their frustration with the slow disbursement process.
Industry experts Gbemi Adelekan, Chairman of the Money Lenders Association, noted that many digital lenders are keen to collaborate with the scheme, though limitations have emerged due to CREDICORP’s preference for institutions licensed by the Central Bank of Nigeria.
Five financial institutions already onboarded in the scheme include FCMB’s Credit Direct (serving civil servants), Wema Bank, Accion Microfinance Bank, Letshego MFB, and Abbey Mortgage Bank
A customer support agent of Accion MFB, who identified himself as Charles, said Nigerians can access between N50,000 and N1 million loans under the scheme at a 4 percent monthly interest rate.
According to him, the tenure of the loan is a minimum of four months and a maximum of 12 months. However, unlike the digital lenders that offer instant, same-day loans, he said this would take three days to process.
On requirements for the loans, he said the applicants must be a working-class individual who can show evidence of employment and must have worked with his employer for at least six months before applying for the loan.
Similarly, a customer agent of Abbey Mortgage Bank, identified as Desola in a phone call noted that the Bank had just concluded the first phase of its disbursement for civil servants and now about to begin a second phase for businesses and individuals that are employed in “reputable organisations”.
Meanwhile, Wema Bank on the CREDICORP website where participating financial institutions are listed, said it is offering Nigerians salary-based and payday loans under the federal government’s scheme at 2 per cent monthly interest rate.
While the CREDICORP last week announced that a total of N3.5 billion had been disbursed to 10, 942 beneficiaries in just five days of the launch, several applicants have been complaining about the slow pace of the disbursement.
Currently, only five financial institutions are participating in the scheme and only one of them, Credit Direct, handled the first phase of the disbursement to civil servants.
