The Federal Government's low-interest consumer credit initiative, led by the Nigeria Credit Corporation (CREDICORP), is set to significantly impact Nigeria's digital lending market.

The Federal Government's low-interest consumer credit initiative, led by the Nigeria Credit Corporation (CREDICORP), is set to significantly impact Nigeria's digital lending market. The initiative offers loans at rates ranging from 4% monthly to 22% annually—considerably more favorable compared to the 10% monthly or 120% annual rates often charged by digital lenders.

The scheme initially targeted civil servants, who have received up to ₦3.5 billion so far, but CREDICORP is now expanding the program to the general public. Participating financial institutions include FCMB’s Credit Direct, Wema Bank, Accion Microfinance Bank, Letshego MFB, and Abbey Mortgage Bank. Working-class Nigerians can now apply for loans through Accion MFB, with amounts ranging from ₦50,000 to ₦1 million at 4% interest monthly, and terms between four and 12 months. Abbey Mortgage Bank is offering loans with annual interest rates of 20-22% and tenures up to three years.

Despite some delays and complaints regarding disbursement, with only five institutions currently involved, the program aims to streamline loan processes. With government-backed loans at much lower rates, digital lenders may need to reduce their rates or adjust their business models to stay competitive. 

Edge Financial Services CEO Martin Joseph highlighted that the higher rates charged by digital lenders reflect the risk involved, but lowering rates to compete with government loans could affect their profit margins. Meanwhile, Gbemi Adelekan, Chairman of the Money Lenders Association, mentioned that many digital lenders want to collaborate with CREDICORP but faced limitations due to licensing differences.

President Bola Tinubu launched the scheme's first phase in April, emphasizing its importance for supporting working citizens in accessing credit for essential needs like housing, transportation, education, and healthcare.