People know about loans, but few understand the nature of local moneylenders and loan systems in Nigeria. While there may be options available to borrowers, for one to Borrow Cash successfully, there should be an avenue for proper guidance to loans with manageable Credit Risk.
Why We Visit Moneylenders
If you live in Nigeria, you already know how tough it is to get loans as a civil servant, business man (especially of the small-scale category) or a simply desperate individual whose pressing needs outweigh the current status of her/his bank account or wallet. Despite her 0.82% GDP growth rate in a report released earlier this year, her rich oil reserves, and even agricultural possibilities, Nigeria’s economy is only favourable on paper, not on her people, a phenomenon brought about by the prolonged social cancer caused by corrupt leaders. This has led her citizens to various survival practices, and explains the presence of Nigeria’s local money lenders.
The Origin Of Nigeria’s Local Moneylenders
A typical lender, like Mrs Kaji A.O who lives in Delta State, South-south Nigeria, is someone who may have come into some family or other fortune over time, and has decided to try out the business of lending. “I started this a long time ago”, Mrs Kaji notes. ” My father was quite rich, and people thronged our home asking for handouts. He would help some, and discourage a few lazy ones or perennial beggars by making them to pay interests on any amounts that they borrowed. With time, some realized that I always had cash to throw around, and would ask me for some,as the only daughter of a rich man. So, I learned to ask for interests too, and that’s how I got here”. Some other lenders borrowed money to start business. This other lender (name withheld) would borrow from a cooperative society that he belonged to at relatively tiny interest rates, then lend to others at higher rates.
How Does It Work?
Well, Nigeria’s local lenders only give loans to salary earners,especially those who work with the government. “It used to be that we would give loans to teachers only because they were the ones who were less paid, were always almost never paid, had no cooperative societies, and so needed funds”, says Mr Anslem Nwokocha, another lender. “But, times have changed. More and more persons need loans, and we are becoming bolder. So, you can imagine, two bankers owe me some hundreds of thousands of naira as we speak”. Asked how it is possible for bankers to ignore the soft staff loans at their offices and patronize a local Shylock, he said,smiling: ” No bank can grant the type of concessions I can grant. Which bank will give you loan without collateral, or even knowing fully well that you owe money elsewhere?”
How To Avoid Risks
A [credit risk] is part of a loan, no doubt. However, “if you have done this long enough, you have a customer base, and you can tell what each customer can do. Also, we collect cheques, but mostly avoid those postdated things in favour of standing orders, agreements among the lender, the borrower, the borrower’s bank and employer to have such cash deducted at source once salary is paid”, states Mr Nwokocha.
Why Are Moneylenders Crowd Favourites?
The local lenders are the borrower’s favourite because of many reasons. As stated before, they can grant loans with rare but manageable [credit risk], and ignore certain anomalies that commercial and [microfinance] banks would not dare to ignore. Their rates never change or succumb to market factors or any other considerations that may make commercial and other banks to invoke the contract document and modify interest rates. Unfortunately, these local money lenders make their interest rates exorbitant. But a borrower seems to have a defense for them: “Look, if you borrow from a bank and your husband becomes sick, the bank never cares. The bank will still want you to keep your part of the agreement. But, the local lender, despite the idea that he is a wicked fellow, can listen to your argument that the payment plan be suspended for a month. I just got one of the post-dated cheques that I gave one returned to me,because I spoke to him about a difficulty, and he understood. Besides, it takes a lot of processing to get loans from these banks. I can get a loan from these local lenders now, like,now”.
Not much seems to be negative about Nigeria’s local lenders. They even have ways of registering their businesses with the government. Care for a quick loan that wouldn’t put you through the hassles of providing documents, collaterals, and filling forms? Maybe you should try them, or check out our Free Loan Search to get loans from alternative sources .