President Bola Ahmed Tinubu has proposed a comprehensive consumer credit system aimed at reviving Nigeria’s economy, with the goal of improving financial access for millions of Nigerians. This daring action is part of the government’s overall aim to boost economic growth, encourage entrepreneurship, and empower people through increased purchasing power.

The proposal was highlighted in a recent opinion piece by Dada Olusegun, Special Assistant to the President on New Media. He emphasized that one of President Tinubu’s central campaign promises during the 2023 presidential election was to introduce a consumer credit scheme. This scheme aims to provide working Nigerians with easier access to credit for essential goods and services, thereby alleviating the financial strain of making substantial lump-sum payments for necessities such as housing, vehicles, and other significant expenses.

Olusegun elaborated on the potential impact of the consumer credit scheme, stating, “President Tinubu’s initiative has the power to transform Nigeria’s economy by broadening access to affordable credit. The goal is to reach 50% of Nigeria’s working population by 2030, which translates to approximately 36 million Nigerians benefiting from this program. This expanded access to credit is expected to boost their purchasing power and, in turn, support the growth of small-scale businesses across the nation.”

He further explained that facilitating access to affordable credit could trigger a multiplier effect within the economy. “This increased availability of credit can lead to heightened demand for goods and services, enhanced productivity, and the creation of more job opportunities. For example, if more Nigerians can afford to invest in solar panels or Compressed Natural Gas (CNG) conversion kits through CREDICORP’s credit offerings, it would not only stimulate growth in related industries but also help reduce household energy costs.”

The consumer credit initiative also aims to combat the detrimental effects of predatory lending practices prevalent in Nigeria’s financial landscape. Olusegun highlighted that the entry of CREDICORP into the consumer credit market could significantly disrupt the operations of existing digital loan apps, which have been notorious for exploiting users through exorbitant interest rates and aggressive lending tactics. Many of these loan apps charge interest rates as high as 33% per month, resulting in an annual rate exceeding 300%, which is vastly higher than the traditional bank loan rates of approximately 27.25% per annum.

In stark contrast, CREDICORP plans to offer interest rates ranging from 2-4% per month, translating to an annual maximum of 22%. This competitive pricing presents a more affordable option for credit seekers, potentially transforming the lending landscape in Nigeria. If CREDICORP opens its services to all working Nigerians, beyond just civil servants, it could force many of these predatory lenders out of the market or compel them to lower their interest rates to remain competitive.