Key points
- NICA says businesses must become credit-ready as access to funding becomes increasingly dependent on creditworthiness.
- Registrar Chris Onalo identifies financial discipline, trustworthiness, honesty and integrity as essential to building a strong credit profile.
- Institute says businesses with credible financial records will be better positioned to access bank, supplier and other forms of credit.
Main story
Nigerian businesses will need stronger credit profiles and greater financial transparency to secure funding as the economy becomes increasingly credit-driven, the National Institute of Credit Administration (NICA) has said.
Prof. Chris Onalo, Registrar and Chief Executive Officer of NICA, made the assessment in a statement issued on Sunday in Lagos.
Onalo said the changing economic environment was making credit an increasingly important source of business growth, requiring companies to demonstrate that they could responsibly manage and repay borrowed funds.
He said businesses could no longer depend primarily on personal connections, collateral or political patronage to secure financing.
According to him, a business’s reputation for meeting financial obligations would increasingly determine how banks, suppliers and other financiers assessed its ability to access credit.
Onalo identified conscientiousness, trustworthiness, honesty and integrity as the qualities businesses needed to develop credible credit profiles.
He said this required businesses to maintain accurate records, exercise financial discipline and meet their obligations when due.
He also stressed the importance of providing accurate information in financial statements, loan applications and other business transactions, while maintaining ethical standards in dealings with partners and financiers.
The NICA chief executive said these attributes had moved beyond being desirable personal qualities to becoming practical requirements in a credit-dependent business environment.
He noted that the recapitalisation of banks, increased deployment of funds by Development Finance Institutions and the availability of supplier credit were expanding potential sources of capital for businesses.
Onalo, however, warned that businesses with weak financial records or poor reputations could struggle to benefit from the available funding.
He said maintaining opaque accounts and engaging in dishonest business practices could damage a company’s credit reputation, while a strong record of responsible financial conduct could become a valuable business asset.
Onalo said NICA was developing systems, training and certification programmes to help assess and establish creditworthiness among businesses and professionals.
He said the institute’s CreditAcademy was also available to provide Nigerians with the technical knowledge and ethical foundation required to operate in an increasingly credit-driven economy.
He consequently urged traders, MSMEs, corporate organisations and other entrepreneurs to restructure their operations around financial transparency, discipline and responsible credit management.
The issues
The availability of capital does not automatically translate into access for every business. As more funding channels emerge, businesses will increasingly have to demonstrate that they can manage borrowed funds responsibly.
This places greater importance on proper record keeping, transparent financial reporting and a consistent history of meeting financial obligations.
What’s being said
“Capital will only flow to those who can be trusted to manage it and return it.” — Prof. Chris Onalo, Registrar and Chief Executive Officer, NICA
What’s next
NICA said it would continue using systems, education and certification to assess and attest to creditworthiness, while its CreditAcademy would provide training for Nigerians seeking to build the required technical and ethical capacity.
Bottom line
As Nigeria’s financing landscape becomes more credit-driven, businesses with transparent records and a proven ability to meet obligations are likely to have a stronger position when seeking funding from banks, suppliers and other financiers.
