Hassles of Obtaining Loans in Nigeria and the Branch Solution

Ugo Aliogo in this report writes on the hassles of obtaining loan and the way forward

In attempting to obtain loans for varying needs, there is no doubt that users in Nigeria face challenges, thereby making them wary of the whole process. Even when loans are successfully received, the struggle still persists as loan providers soon swoop down to recoup every bit of their returns. Jude, an auto mechanic said, “I find it embarrassing to seek loans from those even closest to me, they look at me as someone who is irresponsible, yet the reason for me seeking the loan might be to clear small bills; asides this, I have had an experience with a financial institution, where I had misplaced by mobile device, so I was unreachable for a short time. However, upon getting a replacement weeks later, I found out the company was consistently sending Whatsapp and text messages to every single person in my contact list, alleging that I was a fraudster and debtor.”

For Jude and many Nigerians, this is a common experience. It is bad enough that there is still some social stigma around taking loans, but it gets much worse when people are publicly shamed by institutionalised lenders.

People need loans for many valid reasons. For example, small business owners sometimes require loans either as capital to float their activities, or to scale their returns. Bills and other commitments might also require quick funds to sort. Also , people might need loans to get by with their daily needs until the next payday . This is to say that loans are a valid means of sourcing for funds, and as such, they should not be regarded as the dreadful taboo that many people perceive it as. The lending system is widely adopted in developed countries as a means to drive economic activities and improve living standards for citizens. It is therefore necessary to demystify the idea of loans in Nigeria, and provide helpful financial services to those who need them the most.

Nigerians Need Accessible Loans

Loans are highly instrumental to the survival of people, small businesses, and even larger corporations and governments. Many people in the low-to-average income category often require some sort of aid in between pay-checks. Moreover, the economy of Nigeria hinges heavily on the activities of people in the low-to-middle class, whose activities drive the growth of the national economy. Records show that over the past five years, Micro, Small and Medium-scale Enterprise account for 50% of industrial jobs and 84% of total employment in Nigeria, while also contributing about 49% to the country’s GDP. Despite this, it is surprising to see that traditional banks in Nigeria do not offer much funding to small businesses and low-income earners, and even when they do, they require a lot as evidence of credit-worthiness, and impossible rates as interest on the principal amount. .

In today’s commercial and financial environment, especially with the impact of COVID on businesses, many businesses struggle to survive and grow. In fact, several enterprises fade out over a short period, and this in turn impacts the economy negatively. Due to the obvious circumstances in the country, Nigerians need access to loans to keep their homes running and their businesses to grow. They should be able to access these loans seamlessly and without fear of negative implications.

Challenges of Loan Seekers Today

The real challenge however, is not that there are no lenders in the credit market. Asides traditional banks, there is actually a plethora of online loan providers set up solely to offer small loans to individuals and businesses. This is a business venture in itself, and it thrives in cases where people cannot access formal financial services. There are also many popular microfinance banks set up in the rural areas to cater to the lending needs of people. While this should be a welcome solution, in reality, it is not very conducive for some individuals and businesses. .

This is because many of these local lenders and online loan providers have a severe culture of shaming and harassment to enforce the repayment of their loans. Borrowing from such lenders usually turns out to be a most unpleasant experience for many people, because the loan sharks soon turn around to cripple the reputation of their customers, by announcing every case of default in repayment to friends, family and colleagues.

This unethical culture has rapidly grown in popularity over the past couple years, and has even gotten the attention of the Nigerian House of Representatives as a menace that must be curbed. In recouping loans from lenders, online loan providers ought to adopt more accommodating approaches, rather than attempt to shame defaulters through third-party exposure. Unfortunately, this culture not only affects the defaulters, it also impacts the oblivious third-party who receives some share of the harassment.

A Digital Bank with the Best Loan Policies

While this invasive lending culture persists, a digital bank such as Branch has set the pace in showing how lending can be easy and beneficial to both the borrower and the lender. Branch, being one of the fast-rising digital banks in Nigeria thrives on its accommodating lending policy towards businesses and individuals in general . Unlike many loan sharks today, Branch is strict against selling customer data or sharing customer contacts with third parties. As a policy, the digital bank uses modern encryption to protect and secure their customers’ data and has never shared their customer loan details with any third-party since it launched operations in Nigeria in 2017.

Branch offers what is arguably the easiest access to digital loans in Nigeria, with an access to up to ₦500,000 in loans. With a loan application process that takes only a few steps to complete from the comfort of a mobile phone, as well as no requirement of collaterals or guarantors, Branch offers a safe space to people who need loans the most, and quickly too. Having perfected the art of seamless loan repayment, Branch doesn’t have to charge late fees for people who are late on repayment. Rather, more accommodating options are offered to defaulters in helping them meet up with their loan repayment plans.

In addition, savings and investments with Branch offers one of the highest returns in Nigeria at 20% interest per annum . These features are the exact features that endears this ‘branchless’ bank to its users, who might have been otherwise excluded from accessing needed financial services, thereby distinguishing Branch as the most suitable choice for many Nigerians.

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