By Winston Osuchukwu

Digital transformation has modernised the front end of the credit process in Nigeria, streamlining customer journeys and shortening the path from application to disbursement. However, this progress has not reached the core of the credit process. While digital application flows are now standard, the underlying risk infrastructure remains underdeveloped. Following the withdrawal of the Central Bank of Nigeria’s forbearance measures, the sector’s non-performing loan (NPL) ratio climbed to 8.03% – well above the 5% regulatory limit.

The deeper, structural flaw is that banks still run on legacy risk models and backwards-looking data: an approach that leaves existing portfolios exposed while shutting out the vast retail market. To scale retail and SME credit safely, forward-looking institutions must close three critical gaps in their core credit infrastructure.

1. The Bureau and Data Blind Spot

Many institutions rely on a fragmented view of borrower risk. Internal transaction data offers a deep but narrow view of a borrower’s behaviour within one institution, while periodic credit bureau reports provide a broad but shallow, “negative-only” history across other lenders. Because credit bureau coverage in Nigeria remains relatively low and data sharing is often inconsistent, neither source effectively captures how a borrower actually earns, spends, and repays. Resolving this requires unifying the data architecture, integrating internal behavioural signals with diverse external streams such as payroll, utility, and alternative financial data, to build a continuous, real-time picture of cash flow and true repayment capacity.

2. Static Risk Acceptance Criteria

To assess a borrower’s credit eligibility, banks apply internal risk acceptance criteria that are often static. In a volatile macroeconomic environment marked by shifting interest rates and inflation, a borrower’s financial reality changes rapidly, rendering these rigid, point-in-time benchmarks obsolete. Furthermore, out of caution, these inflexible thresholds often default to conservative rejections for unfamiliar applicants, such as new salaried employees or thin-file borrowers – those with little or no formal credit history for a bureau or bank to draw on – leaving profitable loans on the table. Transitioning to a predictive model changes risk management into a continuous, data-driven cycle. By ingesting high-frequency behavioural data, risk systems can dynamically govern their acceptance criteria in real-time, allowing them to adjust parameters, optimise pricing, and deploy interventions well before a default occurs.

3. The Collections Disconnect

In many institutions, collections teams operate in silos downstream of the credit department, meaning critical recovery performance data rarely gets fed back to front-end risk models. Consequently, underwriting systems fail to learn from actual repayment behaviours – repeating the same structural pricing mistakes. Integrating these functions via a direct data pipeline creates a self-learning loop, routing recovery outcomes back into the origination engine. This empowers the risk engine to dynamically update models, continuously refining underwriting criteria based on real-world results to prevent future defaults and capture lost basis points.

The Bottom Line

Closing these gaps requires intentionality: moving away from ‘set-and-forget’ tools to systems that actively manage risk. It means moving beyond fragmented data toward an integrated intelligence layer that learns from borrower behaviour to govern automated decisions with precision. The lenders that lead over the next year will be those that treat credit not as an isolated transaction, but as a continuous, dynamic process. At Mathesis, we have spent years building the engine that makes this possible, powering over eight million loans for two million Nigerians. The future of credit belongs to those who adopt this predictive approach – and we have the proven tools and expertise to help you get there.

Winston Osuchukwu is the Founder and Chief Executive of Mathesis, a Nigerian credit intelligence company

By Blaise Udunze

Findings show that the United States owes more than $36 trillion while Nigeria owes over N159.28 trillion, with external debt now standing at approximately $51.8 billion. At first glance, when comparing the debt profiles of the world’s largest economy and Africa’s largest economy, it may seem misplaced. America can borrow almost indefinitely because it issues the world’s reserve currency. Nigeria cannot. Yet both countries are confronting a similar worry. This has led to asking, when does debt cease to be a tool for development and become a permanent feature of national survival?

The difference is that while America may be testing the limits of how much debt a superpower can carry, Nigeria is testing how much debt a fragile developing economy can sustain before it begins to mortgage its future.

The latest proposal by the federal government to secure another $1.25 billion World Bank facility under the Nigeria Actions for Investment and Jobs Acceleration Programme has once again reignited a debate that refuses to disappear. What appears to be far from the daily lived experience of Nigerians over the years is having government officials insisting that the loan will support investment, expand access to finance, improve electricity, enhance digital services, and create jobs. According to the claims, these are worthy objectives. But Nigerians have heard similar promises before.

The more important question is no longer whether Nigeria should borrow. Virtually every modern economy borrows. The real question which calls for critical concern is what exactly Nigeria is borrowing for, and why the benefits of decades of borrowing remain largely invisible in the everyday lives of millions of citizens. This is where the national conversation becomes uncomfortable.

Funny enough, over the years, successive governments have justified borrowing as a necessary response to development deficits. Yet despite rising debt levels, many Nigerians struggle to identify corresponding improvements in their lived experiences. This justification has kept many wondering as the roads remain dilapidated, public hospitals are overwhelmed, and the electricity supply also remains unreliable. Talk of the public education system, this has continued to deteriorate badly, and unemployment remains stubbornly high. Inflation has eroded incomes, with the cost of cooking gas hitting N2,400 per kg, while businesses struggle under the weight of high operating costs.

If borrowing is supposed to finance development, where is the development? The concern becomes even more urgent and highly alarming when viewed against the backdrop of Nigeria’s worsening fiscal position. According to the Debt Management Office, public debt has climbed to over N159 trillion. With this outrageous figure, more troubling is the fact that debt servicing now consumes an alarming share of government revenue, which has continued to cripple economic growth and compromise the future. This development caught the attention of the Nigerian Economic Summit Group, as it recently noted that Nigeria’s debt-service-to-revenue ratio remains among the highest in the world. In simple and practical terms, this implies that the government is spending an increasingly large portion of what it earns paying creditors rather than investing in infrastructure, healthcare, education, security, or economic expansion.

This is the hallmark of a debt trap. The danger is not necessarily that Nigeria will default tomorrow. The danger is that the nation becomes trapped in a vicious cycle where governments borrow to finance deficits, then borrow again to service existing obligations, and then borrow even more to cover the consequences of previous borrowing. That cycle is already becoming visible.

Come to think of it, President Bola Tinubu’s administration has boldly defended borrowing as necessary to support reforms, cushion economic shocks, and stimulate growth. Yet critics have continued to point to the fact that since May 2023, borrowing has accelerated significantly.

According to economic analyst Dele Oye, the current administration has added approximately N65.9 trillion to Nigeria’s debt stock within just two years, a figure that exceeds several multiples of what Nigeria accumulated during its first five decades after independence.

Whether one agrees with the politics surrounding that claim is secondary. The underlying concern remains valid since debt is growing far faster than the visible capacity of the economy to generate sustainable revenue. This is why comparisons with the United States are useful.

America’s debt is enormous, but debt sustainability is not determined by the size of debt alone. It is determined by economic productivity. The United States supports its debt burden through a diversified economy, deep capital markets, technological innovation, globally competitive corporations, advanced research institutions, and an unmatched ability to attract global investment.

Debt is not what sustains America. Productivity does. Unlike Nigeria, it continues to rely heavily on crude oil revenues, a narrow tax base, volatile foreign exchange earnings, and a fragile manufacturing sector. The critical difference is that every dollar borrowed by Nigeria therefore carries greater risks than every dollar borrowed by the United States.

When America borrows, it borrows largely in its own currency. When Nigeria borrows externally, it exposes itself to exchange-rate risks that can dramatically increase repayment costs whenever the naira weakens, as this calls for utmost caution. Every currency depreciation effectively inflates the burden of external obligations. What appears manageable today can become overwhelming tomorrow. This reality makes Nigeria’s current debt trajectory particularly concerning, which is the truth.

The World Bank itself has raised concerns about governance risks and structural weaknesses within Nigeria’s fiscal architecture. Even more troubling are recent revelations indicating that more than N34.5 trillion was reportedly deducted through pre-distribution mechanisms before revenues reached the Federation Account between 2023 and 2025. According to the findings, approximately 41 per cent of government revenues were removed as first-line charges before distribution.

Whichever way it is viewed, perhaps as fiscal leakages, weak oversight, or institutional inefficiency, the implications are profound and of critical concern. If we must begin to tell ourselves the factual truth, a nation cannot continue borrowing aggressively while simultaneously failing to maximise the value of revenues it already generates.

This brings us to the central question confronting Nigeria today. The point is, are these loans building future productive capacity, or are they merely financing continuity?

Borrowing can be justified when it funds projects that expand economic output. Investments in power generation, transport infrastructure, agriculture, industrialisation, technology, and education can create long-term growth that eventually pays for the debt itself. In such cases, debt becomes a bridge to prosperity.

But it must be known that borrowing to fund recurrent expenditure, sustain bloated government structures, finance consumption, cover inefficiencies, or service previous debts transforms borrowing into a treadmill. The irony here is that the country runs harder every year but remains trapped in the same place. Unfortunately, much of Nigeria’s fiscal reality increasingly resembles the latter.

The tragedy is that this debt burden is not abstract. It is already affecting ordinary Nigerians. The adverse implication and critical point are that every naira directed toward debt servicing is a naira unavailable for schools, hospitals, security, electricity, or social protection. Every external loan increases future repayment obligations. Every missed opportunity to invest borrowed funds productively transfers today’s policy failures to future generations.

The consequences are visible everywhere. Businesses face prohibitively high borrowing costs. Today in Nigeria, it is no longer news that manufacturers struggle with energy expenses, which adversely affect the citizens. The same applies to youth unemployment, which remains widespread. Also, infrastructure deficits persist. Another critical issue is that states remain heavily dependent on monthly allocations from the federal level. With the developments, economic growth remains too weak to significantly improve living standards.

The result is a contradiction in which debt rises while prosperity stagnates. This is perhaps the greatest lesson Nigeria must learn from America’s debt experience.

The debate should not focus exclusively on how much debt a nation carries. The more important progressive question is whether the economy is productive enough to sustain that debt.

What every Nigerian should know is that Nigeria as a country cannot borrow its way to prosperity because it must first strengthen the foundations that generate sustainable growth. With the lingering challenging surrounding the borrowing and the mountain of debts, one key fact is that it cannot rely indefinitely on external creditors while neglecting domestic productivity. Also, it cannot continue to depend on oil revenues while failing to broaden its tax base. Another loose end that has been a critical matter is that it cannot expect debt-financed development without strong institutions, transparency, accountability and effective project execution.

The solutions are neither mysterious nor impossible. This entails that Nigeria must aggressively expand domestic revenue mobilisation without suffocating businesses and ensure it digitises tax administration, eliminates leakages, enforce fiscal responsibility laws. Also, it must reduce the cost of governance, strengthen public procurement systems, while ensuring that every borrowed naira and kobo is linked to measurable economic outcomes.

Equally important, the government must rebuild public trust. The truth is that citizens are more willing to support reforms when they can see tangible results. Some of the developments in the past that have continued to erode public trust are when subsidy savings are announced, people expect better roads, improved healthcare, reliable electricity, and enhanced security. When new loans are obtained, they expect visible projects and measurable returns, but the reverse has been the case. Those at the helm of affairs of this country must understand that transparency is not merely good governance; it is an economic necessity. History offers a warning.

In 2006, under the leadership of Olusegun Obasanjo, Nigeria celebrated its exit from the Paris Club debt burden after securing one of Africa’s most significant debt relief achievements. Not too long but for a brief period, the country stood relatively free from the crushing obligations that had constrained development for decades. Two decades later, that achievement appears increasingly distant.

The danger is not simply that Nigeria is borrowing. The danger is that borrowing is becoming normalised as a substitute for difficult reforms.

A nation can borrow to build industries or borrow to pay bills. It can borrow to create future wealth or borrow to postpone present challenges. One path expands prosperity; the other compounds dependency.

America’s debt mountain demonstrates that even wealthy nations are not immune to the consequences of structural borrowing. Nigeria’s debt burden demonstrates how much more dangerous that reality becomes when economic productivity fails to keep pace. Borrowing can buy time. It cannot buy prosperity.

Sooner or later, every nation must generate the economic value necessary to justify the debts it accumulates. Nigeria’s future will depend not on how much it can borrow, but on how effectively it can produce, innovate, industrialise, and grow.

That is the lesson hidden underneath America’s debt mountain. It is also the lesson Nigeria ignores at its own peril.

Blaise, a journalist and PR professional, writes from Lagos and can be reached via: bl***********@***il.com

By Osasikemwen Ighile

In today’s volatile economic climate, saving money is no longer just a prudent habit—it is a strategic necessity.  The constantly rising living costs, inflationary pressures, and currency fluctuations have redefined what it means to be financially secure. The difference now lies not in whether people save, but in how they save.

Reports from the National Bureau of Statistics (NBS) highlight this shift, showing inflation in Nigeria climbing from 22.41% in May 2023 to a peak of 34.80% by late 2024. While temporary cooling occurred in early 2025, the overarching trend underscores a stark reality – cash that isn’t generating interest is rapidly losing its purchasing power.

For many Nigerians, the instinct to put money aside remains strong, but without structure and strategy, those savings often fail to deliver real value and results. Money kept idle may offer liquidity and accessibility, but may not preserve value effectively over time.  To achieve financial growth, saving must evolve from passive storage to intentional planning.

For generations, informal saving methods such as keeping cash at home or participating in contribution schemes like ajo or esusu have served as accessible financial tools. While these systems encourage discipline and community trust, they come with clear limitations in a modern economy. Physical cash steadily loses value due to inflation, meaning what seems sufficient today may purchase far less in the near future. Easy access to such funds also increases the likelihood of impulsive spending, weakening long-term financial discipline. More importantly, money kept outside formal financial systems does not grow. It earns no interest, gains no value, and misses the compounding effect that drives wealth accumulation. Contribution schemes, while helpful for short-term goals, are often rigid and do not generate returns—they help rotate money, but not multiply it.

To build and maintain a meaningful financial backbone, savings must be aligned with purpose. An emergency fund, for instance, remains the foundation of financial stability, but leaving it in low-yield accounts limits its potential. Placing such funds in flexible savings options that offer daily interest based on the terms and conditions allows individuals to manage access while still earning modest returns. For funds that are not immediately needed, fixed savings or deposits provide a stronger pathway to growth.

By committing money for a defined period in interest-bearing savings accounts, savers can benefit from interest rates that may assist in preserving value over time, subject to prevailing economic conditions, while also reducing the temptation to spend impulsively. Many individuals report that setting clear savings goals and maintaining disciplined saving habits can improve confidence in managing personal finances.

Saving with clear goals further strengthens financial discipline. When individuals align their savings with specific needs such as rent, education, or business capital, and automate contributions, they remove the uncertainty and inconsistency that often derail financial plans. Over time, this approach builds both confidence and stability.

The difference between merely saving money and actually growing it becomes more evident over time. Funds placed in interest-bearing accounts benefit from compounding and gradually increase in value, while idle cash continues to lose purchasing power. What appears safe on the surface may, in reality, be diminishing.

The emergence of tech-enabled financial platforms like FairMoney has made structured saving more accessible, offering individuals secure and transparent ways to save and manage their funds. FairMoney MFB operates under the oversight of the Central Bank of Nigeria (CBN) and is insured by the Nigeria Deposit Insurance Corporation (NDIC), subject to applicable coverage, limited and regulatory conditions, providing an added layer of confidence.

Ultimately, financial security is not determined solely by income but by how effectively available resources are managed and grown. Intentional saving is about making money work with clarity, discipline, and purpose. In an uncertain economic environment, that shift from simply keeping money to adopting a structured savings approach can form an important component of long-term financial planning.

Osasikemwen Ighile is the Brand Manager for FairMoney Microfinance Bank