The Chief Executive Officer of the National Institute of Credit Administration (NICA), Professor Chris Onalo, has called for decisive policy reforms to integrate credit guarantee schemes more effectively into Nigeria’s financial inclusion agenda.
He spoke at the inaugural Stakeholders Forum of the National Credit Guarantee Company (NCGC) held in Lagos today.
Speaking as a panelist at the well-attended event consisting of policymakers, financial institutions, development partners, and entrepreneurs among others, Onalo stressed that the success of the credit guarantee initiative hinges on institutional strength, transparency, and confidence-building measures.
He called for the establishment of a strong and independent institutional framework for the NCGC, backed by a significant capital base. According to him, a well-capitalized guarantor will not only attract patronage from lending institutions but also foster trust in the system.
Onalo emphasized that the credit guarantee scheme must cover up to 80 per cent of the loan amount in its initial phase to provide meaningful risk sharing. However, he warned that timely claims settlement is crucial to the programme’s credibility. He proposed a claims processing timeline of no more than seven working days, with a view to reducing it even further as systems mature.
The NCGC, he said, must also issue clear debt recovery guidelines for lending institutions, requiring them to demonstrate tangible recovery efforts before guarantees can be activated.
He further advised that lending institutions participating in the scheme should be subject to accreditation by the NCGC. This, he explained, would promote sound credit risk management practices and ensure only financially disciplined institutions handle guaranteed loans.
In addition to institutional oversight, Onalo advocated for capacity-building services for borrowers. These, he noted, should include training in business management, entrepreneurship, and corporate governance to empower beneficiaries to manage their enterprises sustainably.
A crucial part of building trust, according to Onalo, lies in the guarantee issuance process. He stressed that the NCGC must be actively involved in appraising the creditworthiness of applicants and assessing the intended use of funds. He warned against automatic guarantees that rely solely on lender assessments, arguing that such a model invites moral hazard and abuse.
Guarantee fees, he recommended, should remain minimal between two per cent and four per cent to encourage the participation of small businesses, MSMEs, and young entrepreneurs. Eligibility, he added, should be restricted to registered small firms and startups recognized by the Corporate Affairs Commission (CAC), and only after thorough creditworthiness checks have been conducted.
Onalo noted that the credibility of the scheme would be judged not just by policies on paper but by how efficiently and professionally they are implemented. He called on stakeholders to hold the NCGC to high standards of diligence, transparency, and accountability.
Also speaking at the forum, the Managing Director of the National Credit Guarantee Company (NCGC), Mr. Bonaventure Okhaimo, said the NCGC will further support the credit system by de-risking lending and expanding access across underserved segments.
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