The Managing Director of Heritage Bank, Mr Ifie Sekibo has identified poor identity management as the greatest hinderance to boosting access to credit, especially for small and medium enterprises, in Nigeria. Sekibo stated this while speaking as a guest at the Finance Correspondents Association of Nigeria, FICAN annual conference which held on Saturday in Lagos.
Represented by Divisional Head, Strategy and Business Solutions, Mr Segun Akanji, Sekibo said the dearth of effective and standard identity management infrastructure makes access to credit for the SMEs in Nigeria tough as banks only see unmitigated risks. “I am talking about identity management challenge. That is the biggest collateral to lending and that is what is missing in this economy. The day banks can verify where you live, everybody will get loan with ease, because you cannot run away,” he stated.
According to him, there is no need for bank customers to provide collateral to a bank if the bank knows where the customer resides. “But the problem is this, I don’t know where you live. The address of the company is not where you live. And you can wake up in FESTAC today, but tomorrow you move to Ajangbadi or Victoria Island. You don’t have to tell me. And that is a huge problem for banks,” he said.
He noted that the problem is that “there is no value in our identity management as we have it. So, it is not just about banks, it is about the holistic structure where there is no value to the person that each of us will represent”. He gave instances about developed economies such as the US where if one changes accommodation, they must notify all relevant institutions that they deal with because of the inherent value in the system.
“Just like they do abroad, when you are changing accommodation, you will be the one going to your bank, hospital, everywhere, you will dedicate a day in a week until you go around to everyone and inform them of the address change. “Why? There is value to where you live. That’s where your mail, pension, cheque comes. Everything attached to you comes to that address. So, there is value. We need to get to that and then no one will be needing collateral to get some minimum amount to do business.”
Sekibo also observed that although the banks had pushed the government to some form of identity management system through the bank verification number, BVN, it has not been enough to solve the problem of the identity constraining lending in the country. “You can argue that the banks have driven the government to some identity management system through the BVN, but the problem is that the infrastructure that will keep everybody in the homes where they live and not just change is non-existent.
“People take a loan from banks and change accommodation, run away to Ibadan and you cannot find them. That must change. “But how do you do that? It is very simple. All the benefits that is allocated to you as a person, the day you relocate like that, you are as good as dead. “Like when you live abroad, once you misbehave with your identity, you cannot bank, your credit goes bad, you cannot go to hospital and everything else goes bad and you cannot do anything. So, you have a responsibility to yourself and the country that supports you to report yourself.”