The Managing Director/Chief Executive, Arthur Stevens Asset Mgt Limited and former CIS President Mr Tunde Amolegbe have said that the establishment of the N200bn consumer credit Bureau by the Federal Government is a welcome development.....KINDLY READ THE FULL STORY HERE▶
Amolegbe in an exclusive chat with THE WHISTLER said most advanced economies thrive on credit economy and Nigeria should key into the system.
He noted that the credit system creates multiple effects in terms of production and consumption and ultimately enhances economic activities.
Amolegbe emphasized that the creation of a comprehensive credit bureau aligns with the practices of advanced economies, which heavily rely on credit systems to stimulate growth and stability.
He highlighted that integrating a robust credit framework in Nigeria could significantly boost economic activities by creating a multiplier effect in both the production and consumption sectors.
“The establishment of this credit bureau is a strategic move towards fostering a credit-driven economy,” Amolegbe remarked. “Such systems are pivotal in advanced economies and adopting them will help Nigeria unlock its economic potential.”
Amolegbe further elaborated on the benefits of a government-led credit bureau, noting that it offers distinct advantages over private-sector initiatives.
He pointed out that interest rates imposed by private credit bureaus tend to be prohibitively high, which can stifle economic participation.
“The government’s involvement ensures that credit is available at reasonable rates, which is essential for encouraging widespread economic engagement and growth,” Amolegbe explained.
A development economist at the Ahmadu Bello University, Zaria, Professor Peter Njiforte said the N200bn Credit Bureau will not decelerate inflation but it will raise the purchasing power of beneficiaries.
He said the people who are mostly affected by the hunger crisis are in the rural areas, adding that most of them may not benefit from the scheme.
“We know that most of these, most of the people that are very hungry are people in the rural areas and they have very little or no knowledge about financial literacy. How would they be able to access it even when they don’t have bank accounts?” Prof. Njiforte said.
According to him, the Credit Bureau would benefit mosty those in the rural areas especially civil servants and the in the formal sector.
The expert said, “But that’s not the people who are actually the worst affected by the current price hike. The worst affected people by the hunger crisis are mostly people in rural communities and these people have very low financial literacy. They may not even know that something like that exists. They may not know how to go about it. And then there will be certain protocols for you to access that money.
“It means that you are targeting civil servants or those that are working in the formal sector so that they can have a way of recovering and then making it sustainable. ”
He listed some of the requirements to access the N200bn to include having a bank account and Bank Verification Number among others, a requirement that millions of rural dwellers may not meet.
Speaking on the debt burden that the N200bn Credit Bureau may cause, Prof. Njiforte said the government may decide to float treasury bills or government bonds which will increase domestic debts and crowdout local investors.
“It depends on how the government intends to raise it. It is just like robbing Peter to pay Paul. If that amount is going to be raised through the money market, maybe by floating treasury bills, or treasury certificates of government bonds, then it may exacerbate the domestic debts.
“But if the mechanism has been put in place in recovery, the credits, then of course that can be paid in a very short to medium term, so, it may not be so bad.”
Prof. Njiforte who also commented on the N570bn released to the state government said that the people have not felt its impact.
The development economist added, “This money will come to them and they will not embark on projects that can benefit the masses. But a greater percentage of them, just like the experience we’ve had with them on security votes which then they convert to private use
“So we don’t see any difference with the N570bn Tinubu has given to them. But some of them are doing well like in the Southeast, Enugu and Abia are doing well.”
President Bola Tinubu had said that the N200 billion Consumer Credit Corporation established by his administration would make life easier for millions of households.
The President said this in a national broadcast on Sunday on the ongoing nationwide protest.
He said the scheme aimed to help Nigerians acquire essential products without immediate cash payments.
He said this would consequently reduce corruption and eliminate cash and opaque transactions.
“This week, I ordered the release of an additional N50bn each for NELFUND – the student loan, and Credit Corporation from the proceeds of crime recovered by the EFCC.
“Additionally, we have secured $620m under the Digital and Creative Enterprises (IDiCE) – a programme to empower our young people, creating millions of IT and technical jobs that will make them globally competitive.
“These programmes include the 3 million Technical Talents scheme. Unfortunately, one of the digital centres was vandalised during the protests in Kano. What a shame!” he said.
In addition, he said the government had introduced the Skill-Up Artisans Programme (SUPA); the Nigerian Youth Academy (NIYA); and the National Youth Talent Export Programme (NATEP).
He also said more than N570bn had been released to the 36 states to expand livelihood support to their citizens, while 600,000 nano-businesses had benefitted from nano-grants.