While Nigeria's banking sector grapples with rising bad loans, fintech company Nomba and tier-3 commercial bank Globus Bank have achieved something remarkable. Their 18-month credit partnership has disbursed ₦21.3 billion ($15.3 million) to Nigerian businesses with less than 1% of those loans classified as non-performing.
What particularly notable about this announcement is the timing. Nigeria's banking industry is seeing non-performing loans climb from 4.2% in early 2023 to an estimated 7% by the end of 2025, according to industry data.
A Different Approach to Credit Assessment
The partnership's success stems from abandoning traditional lending methods that rely on financial statements and fixed collateral. Instead, they focus on businesses already using Nomba's platform extensively.
"That number did not happen by accident. It happened because we built underwriting infrastructure that actually works, data that is real, collateral that is meaningful, and borrowers who have genuine skin in the game," said Yinka Adewale, chief executive Officer of Nomba.
The lending model targets businesses across wholesale and retail, professional services, food and hospitality, oil and gas, and fast-moving consumer goods sectors. But there is a catch - access is highly selective.
Strict Eligibility Requirements
Of Nomba's over 600,000 business customers in Nigeria, only approximately 20,000 are considered credit-eligible. Adewale explained that eligible businesses must be formally registered, generate steady transaction volumes, have sufficient platform history, and demonstrate understanding of debt obligations.
Even within this pre-screened pool, lending remains limited. Nomba currently serves roughly 10% of credit-eligible businesses, suggesting an extremely cautious approach to loan origination.
Industry Context and Implications
The broader Nigerian lending landscape tells a different story. Rising non-performing loans across the banking system reflect currency devaluations, inflation, and economic pressures making repayment increasingly difficult for borrowers.
Bad loans do more than hurt bank balance sheets - they restrict new lending capacity. The higher the share of non-performing loans, the more capital gets tied up, forcing lenders to become more cautious about extending credit.
The Federal Competition and Consumer Protection Commission's introduction of fines up to ₦100 million or 1% of annual turnover for loan recovery harassment shows regulators are cracking down on aggressive collection practices that have plagued digital lending.
The Real Test Ahead
I find myself wondering whether this model can scale beyond the current 10% of eligible businesses served. The partnership's success appears built on extreme selectivity rather than broad market penetration.
As Nigeria's economic challenges persist, maintaining these low default rates while expanding access will be the true measure of this credit model's sustainability. For now, Nomba and Globus Bank have demonstrated that careful underwriting and deep business integration can deliver results that defy industry trends.
The question remains whether other lenders can replicate this approach or if it requires the unique data advantages that come from being both payment processor and lender to the same businesses.