The Hassle of Getting Loans in Nigeria and the Branch Solution
Ugo Aliogo in this report writes about the hassle of getting a loan and the way forward
While trying to get loans for various needs, there is no doubt that Nigerian users face challenges making them wary of the whole process. Even when loans are successfully received, the struggle persists as loan providers quickly rush to recoup their full returns. Jude, an auto mechanic, said: “I find it embarrassing to ask for loans from those who are even closest to me, they see me as irresponsible, but the reason I am applying for the loan might be pay small bills; other than that, i had an experience with a financial institution, where i was misplaced by a mobile device, so i was unreachable for a short time. However, after I got a replacement weeks later, I found out that the company was constantly sending Whatsapp and SMS to every person on my contact list, alleging that I was a fraudster and a debtor.
For Jude and many Nigerians, this is a common experience. It’s bad enough that there is still some social stigma around taking loans, but it gets much worse when people are publicly humiliated by institutionalized lenders.
There are a number of valid reasons why people need loans. For example, small business owners sometimes need loans either as capital to start their businesses or to increase their returns. Invoices and other commitments may also require quick sorting of funds. In addition, people might need loans to meet their daily needs until the next payday. That is, loans are a valid way to raise funds, and as such, they should not be viewed as the appalling taboo that many people perceive. The loan system is widely adopted in developed countries as a means of stimulating economic activities and improving the standard of living of citizens. There is therefore a need to demystify the idea of loans in Nigeria, and to provide useful financial services to those who need them most.
Nigerians need accessible loans
Loans are very important for the survival of people, small businesses and even big businesses and governments. Many people in the low to middle income category often need some sort of help between paychecks. In addition, Nigeria’s economy relies heavily on the activities of people belonging to the low to middle class, whose activities stimulate the growth of the national economy. Records show that over the past five years, micro, small and medium enterprises account for 50% of industrial jobs and 84% of total employment in Nigeria, while also contributing around 49% to the country’s GDP. Despite this, it is surprising to see that traditional banks in Nigeria do not offer much financing to small businesses and low income people, and even when they do, they demand a lot of proof of creditworthiness and impossible rates. as interest on the principal amount. .
In today’s business and financial environment, especially with the impact of COVID on businesses, many businesses are struggling to survive and grow. In fact, several companies disappear in a short period, which has a negative impact on the economy. Due to the obvious circumstances in the country, Nigerians need access to loans to operate their homes and expand their businesses. They should be able to access these loans transparently and without fear of negative implications.
Challenges for loan seekers today
The real challenge, however, is not that there are no lenders in the credit market. Besides traditional banks, there is actually a plethora of online loan providers set up just to offer small loans to individuals and businesses. This is a commercial enterprise in itself, and it thrives in cases where people cannot access formal financial services. There are also many popular microfinance banks established in rural areas to meet people’s credit needs. While this should be a welcome solution, in reality it is not very conducive for some individuals and businesses. .
Indeed, many of these local lenders and online loan providers have a harsh culture of shame and harassment to enforce their loan repayments. Borrowing from these lenders usually turns out to be a most unpleasant experience for many people, as loan sharks quickly turn around to damage their clients’ reputations, announcing each default event to friends, family and friends. their coworkers.
This unethical culture has rapidly grown in popularity over the past two years and has even caught the attention of the Nigerian House of Representatives as a threat that must be brought under control. To collect loans from lenders, online loan providers should take more accommodating approaches, rather than trying to shame defaulters by exposing themselves to third parties. Unfortunately, this culture not only affects the defaulters, it also affects the unconscious third party who receives some of the harassment.
A digital bank with the best lending policies
While this pervasive lending culture persists, a digital bank like Branch has set the tone by showing how easy and beneficial lending can be for both borrower and lender. Branch, being one of the fastest growing 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. Typically, the digital bank uses modern encryption to protect and secure its customer data and has never shared its customer loan details with a third party since it launched its operations in Nigeria in 2017.
Branch offers what is arguably the easiest access to digital loans in Nigeria, with access to up to 500,000 loans. With a loan application process that takes just a few steps to complete from the comfort of a mobile phone, along with no requirements for collateral or guarantors, Branch provides a safe space for those who need loans the most, and quickly too. Having perfected the art of smooth loan repayments, Branch doesn’t have to charge late fees to those who are late in repaying. On the contrary, more accommodating options are offered to defaulters to help them meet their loan repayment plans.
Additionally, saving and investing with Branch offers one of the highest returns in Nigeria at 20% interest per annum. These features are the exact features that endear this ‘branchless’ bank to its users, who might otherwise have been excluded from accessing necessary financial services, thus distinguishing the branch as the most suitable choice for many Nigerians.