Some economic and financial factors have impeded the development of consumer credit in Nigeria, these include low income, unreliable macroeconomic statistics, high interest rates and weak credit ratings systems for individuals and corporate institutions. The aforementioned factors are generally perceived to constitute the most serious drawback to the development of a consumer credit system in Nigeria.

Further more, since the establishment of a credit system economy in Nigeria, it has been noted that most banks grant credit to the elite and highly placed individuals leaving the not too privileged to their own discretion. According to Mr Adebola Adebise, Head of Finance and Performance management Accenture “lending in most Nigerian banks is concentrated on corporate and commercial market segment with limited exposure to individuals and small businesses”. This brings to fore the inaccessibility of the credit system. If the credit system is going to be successful in alleviating poverty, then banks and other credit organizations would have to make themselves more accessible to the general public, especially the small business owners, entrepreneurs and students. This they can do by making their rates more affordable and the conditions for borrowing less cumbersome.

The need for a central database led to the establishment of the Credit Risk Management System (CRMS), or Credit Bureau by the Central Bank of Nigeria (CBN), which is aimed at gathering information on a borrower’s credit history from various sources, the information is then merged and analyzed to form a comprehensive credit history for the borrower, this helps in ascertaining the credit worthiness of the borrower. This system equally has its challenges.  Nigerians are very skeptical people and getting them to willingly give out personal information is a huge challenge, because they are not certain what the information will be used for. Thus it is imperative for customers to be assured of the security of information and to be sensitized on the benefits of having background financial information.

Since the sourcing of information requires pooling all resources together, there is need for financial institutions to share information with each other, thus they have to overcome their distrust for one another and work together for the ultimate good of their customers and their organizations. Its been discovered that some banks view status enquiries as mere business curtsies to which some banks either do not reply or they give vague replies. This has made several banks give facilities to customers who already have un-serviced debts with other banks and financial institutions.

Working together through the CMRS database will help banks strengthen their Credit Appraisal Procedures .This is achieved by generating accurate and reliable information on banks borrowers from a central database. With such information available, banks will be in a better position to appraise the repayment capabilities of customers seeking new or additional credit facilities from them. This will reduce or totally eliminate the granting of loans to customers who had no capacity to repay and/ or already had non-performing and sometimes abandoned loans in other banks.
Other factors impeding the implementation of a viable consumer credit system include lack of adequate laws and legislation, asset recovery, poor IT, telecommunications and support infrastructure such as electricity, lack of a standardized national system of identification and poor financial incentives.

The effectiveness and success of the credit system lies in its ability to cut across all sections of the society and to deal with issues and challenges as they arise, bearing in mind the need for the public to be well educated about it and the benefits they stand to gain in return. Nevertheless, the government’s vision and effort to establish and promote an enabling environment for Consumer Credit System is not only economically strategic, but highly commendable.