Why Nigerians are Patronising Unsecured Lenders


As a result of many bottlenecks tied around application and approvals from secured lenders, Nigerians are moving in droves to access unsecured lending.

A new survey released by the Central Bank of Nigeria, CBN says “Lenders reported that the availability of unsecured credit to households increased in Q4, 2016 and it was expected to increase further in Q1, 2017”.

According to Investopedia, unsecured loans are loans that are issued and supported only by the borrower’s creditworthiness, rather than by any type of collateral. An unsecured loan is one that is obtained without the use of property as collateral for the loan, and it is also called a signature loan or a personal loan.

In the past 12 months more community banks with more structured operations across major commercial cities. Many of them have also created Internet presence allowing customers to apply for loans online with less physical and offline involvement.

However, secured lending mainly increased for house purchases in the fourth quarter of the year. Lenders told the CBN that it will further increase in the next quarter. Many analysts in the real estate sector claimed that house and property prices are falling as a result of the need to convert them to cash, owners of such property are dropping prices to get buyers.

The survey shows that corporate loan performance worsened across all firm sized business in the current quarter as default rates on lending to small, medium and large PNFCs (private non-financial corporations) worsened in the current quarter, but was expected to improve in the next quarter.

The Credit Conditions Survey Report is usually released every quarter by the CBN to “understand trends and developments in credit conditions”.