Revamping Business Loans: The Need for Stringent Oversight and Flexibility in Nigeria’s Lending Environment

Most prosperous countries assist their citizens with low interest rates to start-ups in business. The citizens in turn pay back as at when due.

I know our banks also do, but not as flexible and friendly. For example, with a benchmark lending rate of 18.75 per cent, how can any business prosper with the volatility in our economic environment?

On the flip side, in countries where loans are advanced for business purposes, the oversight is so strict that borrowers cannot spend the loan on any other purpose.

For example, if someone wanted to start a block industry business, the loan will be directly paid to the suppliers of equipment and raw materials. The borrower would only be advanced money for wages of the workers.

But here, the borrowers take the funds to buy cars, marry new wives, build houses, and expend on things unrelated to the business. How would bad debts not increase?

I think banks should not just give loans and fold their arms. The oversight should be strict to ensure that loans given are properly deployed for the purpose for which the loan was advanced. That may help wreckelessness in spending bank loans.

Grace and peace!!!