 Welcome back, it's not business inside turn plus TV Africa in an effort to mitigate risks and enhance profitability CRC credit bureau developed their delay from propensity score the CRC DPS scoring model that predicts the probability of borrowers who have never been more than 90 days overdue delay in their loan repayment within the next 30 to 60 days as a result of the external social economic factors. Now the score will also take into account factors such as credit history, this honor checks and financial data. Now my guest Dr. Ahmed Babatinde Bukbole is a Nigerian banker, accountant, economist, entrepreneur and business executive. He is the group managing director CEO of CRC credit bureau. He has over 30 years cumulative work experience in the public and the private sectors of the Nigerian economy. He has been the managing director CEO of the bureau since its establishment in 2008. Now prior to this he was also the pioneer CEO of the Abuja Enterprise Agency, AEA. He was also in the banking industry where he rose to the position of the chief finance officer, CFO and general manager of a publicly listed bank. That's a mouthful. When he joins me now to discuss further issues concerning credit bureaus and of course how businesses can protect themselves from defaulting borrowers. Many thanks for joining me on business insights Dr. Bukbole. Good morning. Thank you for having me this morning. All right. So let's talk about credit bureau where we have come from and where we are now in Nigeria. So what's the development been like over the years? It's been very interesting. I must tell you and I'm happy that the bureau, credit bureau, what we call credit reporting is really making its impact in Nigeria. In 2009, three credit bureaus were licensed to be able to support the banking industry to have access to credible information that will enable them to take informed decisions. The old objective was to make lending the duck to be a team of the past is to give opportunity to banks and lenders generally to have opportunity to have information about prospective borrowers and then analyze those information and then take a decision whether or not they want to do actually grant them credit under our terms and conditions. At that time, credit penetration in Nigeria was just around 4% in which case, if you take about 100 people, only four people had access to credit and near you, we know what was going on at that time. You have to know somebody who knows somebody who know the branch manager or know somebody in the bank for you to get credit and of course, the incident of non-performing loans was really alive. It was around over 30% in 2009. So when the bureaus came in, thanks to the central bank of Nigeria who took that initiative to see how can we address all the challenges that surround the issue of access to credit, the issue of non-performing loans, the issue of default and the issue of fraudsters in lending in the banking industry. They licensed those three bureaus and CRC was one of the three licensed credit bureaus. I can tell you that today we have impacted the environment so significantly. For now, we have over 45 trillion value of loans in the economy compared to around 16 trillion at that time. Okay, but then again, still not too long ago, you talked at an event, you talked about credit penetration for consumers in Nigeria and the data released by bureaus showed that fewer than 25 million Nigerians have enjoyed credit in the last decade. But the thing is that right now, one would think that there are lots of companies, organizations, even granting several loans, even all sort of unstructured loans. So what has the impact really been? Because I feel right now that almost everyone is actually giving out loans. Yeah, so that's the impact of the credit bureau infrastructure in the economy. Lenders generally, whether they are licensed banks or non-licensed institutions, now know that there are institutions who have a position of information about borrowers that they can access and they can use that to provide the customers and then grant credit to them. Today, we have about 33 million borrowers in Nigeria compared to what it was then and our credit penetration has moved to over 20%. I told you earlier that we have over 45 trillion loans in the economy as we speak. So those are significant changes and even today when you look at the non-performing loans rate is below 5% even by central bank statistics and below statistics data. So that shows that there have been some level of cleanup of the challenges of the issues that surround not having access to credit. Today we have almost 1,000 microfinance banks. We have about 25 or 26 commercial banks. We have mortgage banks. So we have all manner of banks. In fact, we have FinTechs. We have microlenders who are not even licensed by central bank. A lot of people going into lending now. They are doing that is to be able to see how they can support people to have access to credit and they have infrastructure to enable them to be able to profile properly so that they are not going to be lending the DAC so that they can have adequate information, trusted information from a third party to leverage to be able to give loans. So the place of uncredited borrowers cannot be overemphasized because not so long ago we were all aware of what happened with some unscrupulous loan sharks, how the central bank of Nigeria wielded its big stick and the FCC also did. But over time there has been innovation in the industry specifically now. We have a credit risk calculator. Can you tell us about it and how it is changing the face of credit and risk management? So the CLC credit risk calculator is one of the services we render to lenders. And the whole objective is to assist them to be able to calculate the risk inherent in a typical borrower. So when a borrower comes and applies for a loan, the whole essence, they want to know whether that borrower has the capacity to repay the loans and whether it will be willing to repay the loans. So there is that capacity and willingness. Those are two fundamental issues. Now the risk calculator will enable them to have a scoring of the particular potential borrower, whether he is low risk, medium risk, or high risk. Now when they know that a typical borrower is high risk, then they may turn it down. When a typical borrower is medium risk, then they may have some conditions attached to that kind of loan. So maybe higher interest rates or perhaps support some comfort in terms of collateral or security. When a borrower is low risk, as you know, as they could receive from risk calculator, then they could relax a lot of things. They know that that person has always been doing very well with making repayment obligations in the past. They know that they can offer him relatively low interest rates. They know that they don't need to excessively charge him, I mean, requesting to go and bring on collateral security that he may not be able to have. So the whole essence is to be able to reward those who are good and encourage them to have access to credit without stress and discourage those who are bad from having access to credit. So invariably in the long run, it's actually is helping in reducing non-performing loans? It's helping in reducing non-performing loans because then you have been able to leverage on good information to select and, you know, refuse what we call advanced selection is to, I mean, to encourage you to be able to take advantage of that. But much more supposedly is that it enables you to do risk-based pricing, in which case if a customer has low risk, then he enjoys low interest rates. And so the error of everybody paying the same interest rate, irrespective of the risk inherent in that. So there will be no ceiling per se for everyone? Yes, there is no ceiling. Low risk, low interest rate, high risk, high interest rate. But how does this algorithm work? Because it's sounding very techie to be right. Well, it's techie because it leverages on AI, artificial intelligence, machine learning to work. So we are a data company and so we go into this data, what are the kind of data we have? We have loans that have been taken, we have, you know, how long that those loans have been taken, how many loans have a customer taking, what's the performance of those loans? So it's all this information that we put together to generate the calculator and it's between 0 to 100. So if you are between 0 to 50, that is low risk and that then means that you can enjoy interest rate that is relatively low and you also can easily have access to credit. But if your risk calculator is, let's say it's 80 or 90 percent, that means you are a high risk customer. The tendency is that you may be declined. So but each institution, each lending institution will have to set their own threshold depending on their risk acceptance or risk appetite. Some institutions are very low, they have low risk appetite. So they go for only those who have very low risk and some don't mind taking on big risk and lend to those high risk people, but maybe with higher interest rates and probably higher or bigger collateral and some other stiff conditions that will be attached to those loans. Still business insight on plus TV Africa, we'll take a quick break out when we return there. We still have Dr. Boko Ola with us in the studios, we're looking more about credit report, how you can go about checking your credit report and their issues of error and how you can actually mitigate against all of that. We'll be right back in a moment, don't go away. Welcome back, it's still business insight and plus TV Africa, we're looking at risk management credit reports, credit bureaus and of course how we can actually improve on the sector. I still have Dr. Boko Ola with me, thanks for staying with me. Okay, now there's this talk of credit reports, how do you go about, maybe as a borrower, how do you go about checking your own credit report, is it possible to do? It's very possible, credit report is like a statement, like a certificate of your credit wordiness. It aggregates all the information we have about you from everywhere you have borrowed and all the information that we are supposed to have, your demographics information, your address information, the loans you have taken one by one. So that way you cannot run away? You cannot run away, you cannot run away, and that's a good thing about the system. And then it shows the performance of each of those loans, even where you have return checks that information is there in the credit bureau, if you have litigation against you relating to the credit or any of the credit is also in that credit report. So that credit report is like a certificate that shows who you are and your credit wordiness. And you can have access to it by going to the website of CRC credit bureau. Is it just as CRC or just generally Nigerians can actually check credit bureau, can you get it from your own bank? You can, so we have a relationship with some banks where if you have internet banking, you can access the information through those internet banking of some of the banks, but not all of them. We encourage people to come to the website of CRC credit bureau or to... Okay, fine, fine, but let's talk about, so are there issues over time, maybe errors on credit reports and maybe lenders, I'm sorry, bullers right now can actually do some sort of reconciliation. We have, we take that very seriously because definitely there will be errors. Those errors can come from the institution that submitted data to us or it can come from our cell when we process those data. So what we encourage, and that's why we encourage everyone to go and get their credit report. And I know that everybody is sent out to one credit report in a year. One report in a year. One report in a year, free of charge. So that's why I'm directing them to the business to defend them. So the free thing you can actually just get your credit report anywhere. You can get it if it's one. Any day thereafter, then you pay for it. So you then have to lodge your complaint with the bank when you have spotted where the error come from, or you can approach the credit bureau, you can send an email, you can make a calling and say, oh, I've spotted something on my credit report. I don't think it's right, and then we'll help you to sort it out. Okay, fine. The last question would be, after disputing credits and errors and everything, because most times some people have said that when they try to get loans, they said they don't really have a good credit history or their names will be placed on credit bureau list or something. How do you get your name or how your organization out of that particular list? So the credit bureau is not a black box. The credit bureau is just a data warehouse, and it's good to have your name in that credit bureau. Why is it good? It's good because if you have good credit history from the data that we have, even lenders will come looking for you to give you loans. Okay. But if your name is not there at all, then nobody knows about you, and you then can become a high-risk person and a high-risk borrower. So people should not see credit bureau as something that is punitive when your name was in there. That's how much we think about it. No, it's not like that. It becomes punitive for you if you have bad credit, and the information is accessed, and they discover that you do not honor your obligations and you have bad loans. But if you have good loans, I would encourage you to insist that your name should be put into the credit bureau so that you can have anybody who checks it up who would be interested in giving you loans under favorable terms and conditions. All right. Thank you so much. We have been speaking with Dr. Tundi Bukbola, CEO of Seattle C credit bureau. Do appreciate your time and all of the input you have brought on the show. Thank you so much. Nice day, everyone. All right. As we go on the show today, 2030, Nigeria will top the league table of most extreme poor people in the world over taking DR Congo, India and Madagascar if deliberate steps are not taken to stabilize the economy. That was the submission of Professor Stafford and Deccan while delivering his key knowledge at the launch of the state of enterprise report of 2022, which held here in Lagos. I'll leave you with details of that. I am Justin Akadounia. See you again next time. Bye for now. 10 plus low firm. The made in addition of the state of enterprise report 2022 brought together expert from the financial and professional services sector, FBS. The SSE report, a first of its kind, an annual industry publication gives insight into Nigeria's FBS sector. The lever in his keynote address, a professor of economic policy at the University of Oxford, Stefan Deccan, stated that the financial and professional services industry is instrumented to driving any nation's economy. He noted that un-nigrated thrives and is more stable with better economic policy will cause all businesses to flourish. When you look at any country in the world, badly run or well run, relatively speaking, it can be a few thousand, can be a few hundred, can be a few dozen, group of people with power of influence that determine the direction of politics and the economics in a country. Stakeholders say that if there is prosperity and no poverty, there will be peace. For them, the FBS industry is instrumental in driving the prosperity and economic development of Nigeria. We will ensure that together in our practice as professional firms, we give Nigeria the very best that it deserves. And we will also ensure that the private sector under this umbrella comes together as a partner with other sectors for growth and development of our nation. There's clearly a need to change the narrative about Nigeria. And we can't leave it alone to the public sector. The private sector also needs to take the initiative and give in the very critical role that the financial and professional services sector plays in economic development, as we have seen in other parts of the world. This is why the enterprise NGR was established. It's about realizing that there's a bigger goal for all of us and therefore engaging. And, you know, engagements have taken place historically in different forms. We think this kind of platform, where there's hopefully a collective voice, a sort of unified voice, can also have maybe a bigger impact. Managing Director of a Merchant Bank, Banja Bikwungube, emphasizes the need for strong partnership between the business community and those with political powers. And we see the financial and professional services as a catalyst for economic development and growth. And the focus here is to provide a platform that can ensure that the financial and professional services sector in Nigeria can rank with that anywhere in the world and can also provide that catalyst and provide that platform to generate development and growth across all sectors of the economy. Just like other participants, Banja hopes that if all chronicled in the report are adhered to, everyone stands to benefit from the ripple effects of economic development.