By Victor Ogiemwonyi
The Necessity of Consumer Credit
In December 2025, I wrote about the urgent need to create consumer credit leverage for the Nigerian economy. The absence of systemic credit is the primary reason, why majority of our citizens have lower living standards.
When domestic earnings are compounded with credit, the multiplier effect is profound. Today, Nigerians pay cash for nearly everything, limiting purchasing power and preventing incomes from stretching. In contrast, developed economies rely on sophisticated credit systems that underpin higher living standards.
Developing a robust consumer credit ecosystem is vital to boosting spending, which drives GDP. If Nigeria is to reach a $1 trillion GDP by 2030, systemic consumer credit is not a luxury. it is an imperative.
The True Mandate of Nigeria CreditCorp
The newly created Nigerian Consumer Credit Corporation (CrediCorp) is a commendable start. Yet its current focus, granting credit mainly to civil servants via salary deduction is far too narrow.
CrediCorp’s mission is not to become another government bank. Its role must be to build the foundational infrastructure for consumer credit across the economy. Liquidity already exists in the private sector. Every merchant selling goods and services is a potential credit node, provided they have structural backing.
CrediCorp’s progress with NIN‑backed credit scores is encouraging. But two additional accelerators are needed to catalyze adoption.
Two Catalysts for Market‑Wide Credit Adoption
1. A Consumer Credit Insurance (CCI) Scheme
Merchants cannot absorb default risk alone. A Consumer Credit Insurance framework would allow them to buy coverage funded by a marginal fee built into purchase prices. For example, on a ₦200,000 item, a 1% premium (₦2,000) could go into an insurance pool.
This would unlock profitable underwriting volumes for our insurance companies and give merchants confidence to sell on credit.
1. A Consumer Credit Tribunal (CCT)
Nigeria’s court system is slow and costly. A specialised tribunal anchored by CrediCorp could provide fast‑track dispute resolution. Using citizen juries, it would swiftly resolve defaults and contractual disputes. Swift, binding consequences would naturally keep default rates low.
The Untapped Goldmine: Why Are Our Banks Leaving Billions on the Table?
Merchant‑led credit is vital, but an even larger apparatus already exists: the commercial credit card business.
In developed economies, credit cards are a primary profit engine. Over 80% of American adults hold at least one card. Banks earn from interest on micro‑loans and merchant transaction fees – merchants gladly share the burden because credit boosts sales volumes.
Credit cards allow consumers to manage daily expenses, live comfortably, and build repayment histories. These histories then support higher‑value products like mortgages. Nigerian banks, however, have left this lucrative market untapped.
De‑Risking the Retail Market: The 3% Principle
The U.S. consumer credit card business has maintained a remarkably consistent default rate of about 3%. At the end of 2025, it stood at 2.92%.
Decades ago, as a graduate student in the U.S., my class studied 30 years of consumer credit history. Despite recessions and economic shifts, defaults averaged just 3%. That means 97% of consumers pay their debts.
Nigeria’s consumer psychology is no different. Citizens want to pay their bills. Yet our banks’ retail credit initiatives, remain weak. Instead of innovating, they sit on billions in zero‑interest deposits, deploying them into government overdrafts or bonds secured by ISPOs. This requires little entrepreneurial effort but leaves the real economy starved of credit.
By retailing these idle deposits into consumer credit, banks could expand loan books safely, while productively deploying reserves currently stranded at the Central Bank.
The Modern Playbook: Fractional Risk vs. Corporate Concentration
The old excuse of weak KYC is obsolete. Integration of NIN, BVN, and digital tracking has solved identity issues. AI‑enabled fraud systems can secure transactions in real time.
Consider the math: a Tier‑1 bank allocating ₦10 billion to retail credit cards for one million Nigerians spreads risk widely. Compare this to ₦10 billion concentrated in a few volatile corporate loans in oil and gas, loans that have repeatedly destabilized the banking sector.
Distributed retail risk is safer, more resilient, and more profitable.
A Call to Action
Millions of hardworking Nigerians remain trapped in lower living standards not because they lack income, but because the financial system denies them credit at scale.
Our banks must urgently pivot. CrediCorp must focus on infrastructure, not retail lending. Merchants must embrace credit sales, supported by insurance and tribunals. And banks must unlock the immense potential of consumer credit cards.
Nigeria’s path to prosperity lies not in idle deposits or government securities, but in empowering ordinary citizens with credit.
It is time for our financial institutions to step up, to power the real economy.
Market conversations.substack.com
Ogiemwonyi, a retired Investment Banker, writes from Lagos
