Hassles of obtaining loans in Nigeria and Branch Solution

In attempting to obtain loans for varying needs, there is no doubt that users in Nigeria face challenges, thereby making them wary of the whole process. Even when loans are successfully received, the struggle still persists as loan providers soon swoop down to recoup every bit of their returns.

Jude, an auto mechanic said, “I find it embarrassing to seek loans from those even closest to me, they look at me as someone who is irresponsible, yet the reason for me seeking the loan might be to clear small bills; asides this, I have had an experience with a financial institution, where I had misplaced by mobile device, so I was unreachable for a short time. However, upon getting a replacement weeks later, I found out the company was consistently sending Whatsapp and text messages to every single person in my contact list, alleging that I was a fraudster and debtor.”

For Jude and many Nigerians, this is a common experience. It is bad enough that there is still some social stigma around taking loans, but it gets much worse when people are publicly shamed by institutionalised lenders.

People need loans for many valid reasons. For example, small business owners sometimes require loans either as capital to float their activities, or to scale their returns. Bills and other commitments might also require quick funds to sort. Also, people might need loans to get by with their daily needs until the next payday. This is to say that loans are a valid means of sourcing for funds, and as such, they should not be regarded as the dreadful taboo that many people perceive it as. The lending system is widely adopted in developed countries as a means to drive economic activities and improve living standards for citizens. It is therefore necessary to demystify the idea of loans in Nigeria, and provide helpful financial services to those who need them the most.

Nigerians Need Accessible Loans

Loans are highly instrumental to the survival of people, small businesses, and even larger corporations and governments. Many people in the low-to-average income category often require some sort of aid in between pay-checks. Moreover, the economy of Nigeria hinges heavily on the activities of people in the low-to-middle class, whose activities drive the growth of the national economy.

Records show that over the past five years, Micro, Small and Medium-scale Enterprise account for 50 per cent of industrial jobs and 84 per cent of total employment in Nigeria, while also contributing about 49 per cent to the country’s GDP. Despite this, it is surprising to see that traditional banks in Nigeria do not offer much funding to small businesses and low-income earners, and even when they do, they require a lot as evidence of credit-worthiness, and impossible rates as interest on the principal amount.

In today’s commercial and financial environment, especially with the impact of COVID on businesses, many businesses struggle to survive and grow. In fact, several enterprises fade out over a short period, and this, in turn, impacts the economy negatively. Due to the obvious circumstances in the country, Nigerians need access to loans to keep their homes running and their businesses thriving. They should be able to access these loans seamlessly and without fear of negative implications.

Challenges of Loan Seekers Today

The real challenge however, is not that there are no lenders in the credit market. Asides traditional banks, there are actually a lot of online loan providers set up solely to offer small loans to individuals and businesses. This is a business venture in itself, and it thrives in cases where people cannot access formal financial services. There are also many popular microfinance banks set up in the rural areas to cater to the lending needs of people. While this should be a welcome solution, in reality, it is not very conducive for some individuals and businesses.

This is because many of these local lenders and online loan providers have a severe culture of shaming and harassing their customers to enforce the repayment of their loans. Borrowing from such lenders usually turns out to be an unpleasant experience for many people, because the loan sharks soon turn around to cripple the reputation of their customers, by announcing every case of default or delay in repayment to friends, family and colleagues – in fact, everyone on their contact list. Just imagine the embarrassment. What should have been a private and confidential transaction becomes everyone’s affair.   

This unethical culture has rapidly grown in popularity over the past couple of years, and has even gotten the attention of the Nigerian House of Representatives as a menace that must be curbed. In recouping loans from lenders, online loan providers ought to adopt more accommodating approaches, rather than attempt to shame defaulters through third-party exposure.

Unfortunately, this culture not only affects the defaulters, it also affects the innocent third-party who also receives some share of the harassment. Imagine getting an SMS alert and you think you’ve just received a credit alert, only to find that some company is reporting their customer to you over a transaction you knew nothing about. Did they also report the person all the other times they repaid on time?

A Digital Bank with the Best Loan Policies

While this invasive lending culture persists, a digital bank such as Branch has set the pace in showing how lending can be easy and beneficial to both the borrower and the lender. Branch, being one of the fast-rising digital banks in Nigeria thrives on its accommodating lending policy towards small businesses and individuals in general.

Unlike many loan sharks today, Branch is strict against selling customer data or sharing customer contacts with third parties. As a policy, the digital bank uses modern encryption to protect and secure their customers’ data and has never shared their customer loan details with any third-party since it launched 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 in loans. The loan application process takes only a few steps to complete from the comfort of a mobile phone. There are no requirements for collaterals or guarantors. It’s an app that offers a safe space to people who need loans the most, and quickly too. Having perfected the art of seamless loan repayment, Branch doesn’t have to charge late fees for people who are late on repayment. Rather, more accommodating options are offered to defaulters in helping them meet up with their loan repayment plans.

In addition, investments with Branch offer one of the highest returns in Nigeria at 20 per cent interest per annum. The app also has a wallet feature that allows you to make unlimited free transfers and pay bills without charges. All those service charges and transfer commissions that regular banks charge do not apply here. These features are the exact features that endear this ‘branchless’ bank to its users, who might have been otherwise excluded from accessing needed financial services. This is why Branch stands out as the most suitable financial app for many Nigerians.

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