Economy

Rising Prominence of Payroll Lending Activities in Nigeria

Published

6 years ago

02/08/2019

By Agusto & Co

Prior to the emergence of core payday lenders in the country, commercial banks dominated the financial services sector, providing loan facilities and savings to corporate clients and to a significantly lesser extent, retail customers.

Retail financial services offered were primarily tailored to the upper tiers of the country’s income categories, focusing on high net worth individuals and high earning employees of prominent organisations in the country.

Although alternative lenders such as community banks and credit unions existed, these organisations were often left to operate in the periphery due to the dominance of commercial (and merchant) banks.

In recognition of the dearth of financial services available to the impoverished and low-income earners, the Central Bank of Nigeria (CBN) over the last two decades made various attempts to enhance the delivery to financial services to the Nigerian populace.

Most prominently, the introduction of a microfinance policy in 2005 (and subsequent licensing of over 1,000 operators) was expected to fill the void created by commercial bank operators’ apathy towards individual lending. In spite of this, overall penetration remained low, attributable to inherent challenges including poor access to finance, weak risk management practices and poor understanding of microfinance banking.

As MFBs focused on the economically disadvantaged and low-income earners, the needs of formally employed individuals were largely unmet. Thus, many low to middle-income earners in active employment often sought loans from alternative channels such as family and friends, loan sharks and informal lenders.

Since the 2010s, payroll lending activities have grown in prominence mainly attributable to the unmet demand for small-sum short term credit by low to middle income individuals.

Borrowers often seek these loan facilities to pay recurring bills such as utilities and rent, as well as other expenses such as school fees, medical bills and other unexpected expenses that need to be settled before the next payday.

These loans typically attract high interest rates ranging from 3% to 6% a month, which reflect the risks associated with the average salary earner, as well as the absence of collateral requirements. Core players such as Renmoney, Credit Direct and Zedvance have grown business volumes over the last few years due to the overall gap in the supply of short-term microcredit.

In contrast to traditional lenders, industry operators provide customers with a quick and convenient process for obtaining loan facilities, with disbursement typically within 48 hours of submitting all required documents or the meeting of all conditions.

Unlike personal loans offered by major financial institutions in the country, payday loans are widely recognised for the absence of collateral (and in some cases, guarantor) requirements when granting loans to customers. Lenders typically use the customer’s wages as a basis for lending, with the loan repayment(s) typically a percentage of the borrower’s monthly salary/income.

In correspondence with the rising fortunes of the industry, intensifying competition amongst industry operators and external players, such as commercial banks and nano (micro) lenders, remains a threat to the retail dominance enjoyed by prominent industry operators.

Commercial banks are increasingly offering salary advances and quick credit facilities to individuals that may not typically meet the bank’s risk assessment criteria for traditional products. With a growing number of banks adjusting their respective business strategies to capture the retail segment, we expect competition to remain elevated going forward.

Overall, demand for payday loans should remain high, with a continued influx of new entrants seeking to provide services to the underserved market.

With the burgeoning impact of big data and AI-driven tools, digital financial solutions are expected to play a larger role within the Industry as current operators and new entrants seek to boost efficiency and improve service delivery amid the heightened competitive environment.

Economy

TotalEnergies Sells 10% Stake in Renaissance JV to Vaaris

Published

10 hours ago

14/01/2026

Adedapo Adesanya

By Adedapo Adesanya

TotalEnergies EP Nigeria has signed a Sale and Purchase Agreement with Vaaris for the divestment of its 10 per cent non-operated interest in the Renaissance JV licences in Nigeria.

The Renaissance JV, formerly known as the SPDC JV, is an unincorporated joint venture between Nigerian National Petroleum Company Limited (55 per cent), Renaissance Africa Energy Company Ltd (30 per cent, operator), TotalEnergies EP Nigeria (10 per cent) and Agip Energy and Natural Resources Nigeria (5 per cent), which holds 18 licences in the Niger Delta.

In a statement by TotalEnergies on Wednesday, it was stated that under the agreement signed with Vaaris, TotalEnergies EP Nigeria will sell its 10 per cent participating interest and all its rights and obligations in 15 licences of Renaissance JV, which are producing mainly oil.

Production from these licences, it was said, represented approximately 16,000 barrels equivalent per day in company’s share in 2025.

The agreement also stated that TotalEnergies EP Nigeria will also transfer to Vaaris its 10 per cent participating interest in the three other licences of Renaissance JV which are producing mainly gas, namely OML 23, OML 28 and OML 77, while TotalEnergies will retain full economic interest in these licences, which currently account for 50 per cent of Nigeria LNG gas supply.

Business Post reports that the conclusion of the deal is subject to customary conditions, including regulatory approvals.

“TotalEnergies EP Nigeria has signed a Sale and Purchase Agreement with Vaaris for the sale of its 10 per cent non-operated interest in the Renaissance JV licences in Nigeria.

“Under the agreement signed with Vaaris, TotalEnergies EP Nigeria will sell to Vaaris its 10 per cent participating interest and all its rights and obligations in 15 licences of Renaissance JV, which are producing mainly oil. Production from these licences represented approximately 16,000 barrels equivalent per day in the company’s share in 2025.

“TotalEnergies EP Nigeria will also transfer to Vaaris its 10 per cent participating interest in the 3 other licenses of Renaissance JV, which are producing mainly gas (OML 23, OML 28 and OML 77), while TotalEnergies will retain full economic interest in these licenses, which currently account for 50 per cent of Nigeria LNG gas supply. Closing is subject to customary conditions, including regulatory approvals,” the statement reads in part.

The development is part of TotalEnergies’ strategies to dump more assets to lighten its books and debt.

Economy

NGX RegCo Revokes Trading Licence of Monument Securities

Published

20 hours ago

14/01/2026

Aduragbemi Omiyale

By Aduragbemi Omiyale

The trading licence of Monument Securities and Finance Limited has been revoked by the regulatory arm of the Nigerian Exchange (NGX) Group Plc.

Known as NGX Regulations Limited (NGX Regco), the regulator said it took back the operating licence of the organisation after it shut down its operations.

The revocation of the licence was approved by Regulation and New Business Committee (RNBC) at its meeting held on September 24, 2025, a notice from the signed by the Head of Market Regulations at the agency, Chinedu Akamaka, said.

“This is to formally notify all trading license holders that the board of NGX Regulation Limited (NGX RegCo) has approved the decision of the Regulation and New Business Committee (RNBC)” in respect of Monument Securities and Finance Limited, a part of the disclosure stated.

Monument Securities and Finance Limited was earlier licensed to assist clients with the trading of stocks in the Nigerian capital market.

However, with the latest development, the firm is no longer authorised to perform this function.

Economy

NEITI Advocates Fiscal Discipline, Transparency as FG, States, LGs Get N6trn in Three Months

Published

20 hours ago

14/01/2026

Adedapo Adesanya

By Adedapo Adesanya

The Nigeria Extractive Industries Transparency Initiative (NEITI) has called for fiscal discipline and transparency as data showed that federal government, states, and local governments shared a whopping N6 trillion Federation Account Allocation Committee (FAAC) disbursements in the third quarter of last year.

In its analysis of the FAAC Q3 2025 allocation, the body revealed that the federal government received N2.19 trillion, states received N1.97 trillion, and local governments received N1.45 trillion.

According to a statement by the Director of Communication and Stakeholders Management at NEITI, Mrs Obiageli Onuorah, the allocation indicated a historic rise in federation account receipts and distributions, explaining that year-on-year quarterly FAAC allocations in 2025 grew by 55.6 per cent compared with Q3 of 2024 while it more than doubling allocations over two years.

The report contained in the agency’s Quarterly Review noted that the N6 trillion included 13 per cent payments to derivative states. It also showed that statutory revenues accounted for 62 per cent of shared receipts, while Value Added Tax (VAT) was 34 per cent, and Electronic Money Transfer Levy (EMTL) and augmentation from non-oil excess revenue each accounted for 2 per cent, respectively.

The distribution to the 36 states comprised revenues from statutory sources, VAT, EMTL, and ecological funds. States also received additional N100 billion as augmentation from the non-oil excess revenue account.

The Executive Secretary of NEITI, Mr Sarkin Adar, called on the Office of the Accountant General of the Federation, the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) FAAC, the National Economic Council (NEC), the National Assembly, and state governments to act on the recommendations to strengthen transparency, accountability, and long-term fiscal sustainability.

“Though the Quarter 3 2025 FAAC results are encouraging, NEITI reiterates that the data presents an opportunity to the government to institutionalise prudent fiscal practices that will protect the gains that have been recorded so far in growing revenue and reduce vulnerability to commodity shocks.

“The Q3 2025 FAAC results are encouraging, but windfalls must be managed with discipline. Greater transparency, realistic budgeting, and stronger stabilisation mechanisms will ensure these resources deliver durable benefits for all Nigerians,” Mr Adar said.

NEITI urged the government at all levels to ensure the growth of Nigeria’s sovereign wealth and stabilisation capacity, by committing to regular transfers to the Nigeria Sovereign Wealth Fund and other related stabilisation mechanisms in line with the fiscal responsibility frameworks.

It further advised governments at all levels to adopt realistic budget benchmarks by setting more conservative and achievable crude oil production and price assumptions in the budget to reduce implementation gaps, deficit, and debt metrics.

This, it said, is in addition to accelerating revenue diversification by prioritising reforms that would attract investments into the mining sector, expedite legislation to modernise the Mineral and Mining Act, support reforms in the downstream petroleum sector, as well as the full implementation of the Petroleum Industry Act (PIA) to expand domestic refining and value addition.