With an estimated ₦64 trillion credit deficit, Nigeria is now experiencing slow Economic Development and poor company performance. The CEO of Smallsmall, Tunde Balogun, said that implementing an instalment payment plan for goods and services could aid in closing this disparity. Balogun announced the launch of FairApp, an app that lets users shop and pay later with flexible payment plans, during the Smallsmall show, which drew 3,000 participants and over 100 vendors. Participants in the fair had the chance to buy goods using these adaptable payment methods.
According to Balogun, an efficient instalment plan can improve the financial performance of Nigerian companies in addition to addressing the credit gap. He stressed that companies that are having trouble drawing in clients or making money can profit from providing options for installment payments. To assist this project, Smallsmall has also teamed with firms in the financial, logistics, and identity verification domains. Businesses were able to work together and discover new prospects during the fair. Nigeria’s credit gap, which is now estimated to be worth over ₦64 trillion, is a major impediment to Economic Growth that affects a number of industries, including consumer products, real estate, and small and medium-sized businesses (SMEs).
Consumers are unable to fund goods without credit.
Credit availability is restricted by this disparity, which makes it difficult for businesses to grow, innovate, and stay competitive. SMEs are especially vulnerable since they make up around 96% of all firms in Nigeria and account for 50% of the country’s GDP. Strict collateral requirements, exorbitant interest rates, and a lack of financial solutions that meet their needs make it difficult for many of these enterprises to obtain financing. Their ability to grow, generate employment, and have a bigger economic impact is so hindered. The Loan gap widens the housing shortfall in the Real Estate sector, which is now estimated to be more than 17 million units.
Many Nigerians are compelled to live in rental markets or informally because they have limited access to cheap mortgages, which prevents them from buying homes. The Construction industry, which would otherwise profit from higher house demand, is likewise hampered by the lack of readily available credit. The industry for consumer goods is also impacted. Consumers are unable to fund goods without credit, which reduces consumer spending and lowers Revenue for firms. In a nation where more than 40% of the people live in Poverty and have little disposable income, this scenario is especially difficult.
There are obstacles when implementing an instalment payment plan.
On the other hand, payment plans in instalments, such as the one Tunde Balogun suggested via FairApp, present a viable remedy. Through the FairApp platform, customers can buy products and services and make payments over time in instalments. Through this approach, businesses may reach a wider customer base and make items and services more available to consumers who might not have the upfront payments. Instalment payment plans are recommended by financial experts as a means of closing the credit gap.
Furthermore, “Instalment payments could democratize access to goods and services, boosting consumption and driving economic growth,” says PwC Nigeria Chief Economist Dr. Andrew Nevin. He underlines that more people may engage in the Economy by spreading the cost of purchases across time, which may raise demand and spur growth in a number of industries. There are obstacles to overcome when putting an instalment payment plan in place in Nigeria. The danger of default is a significant worry, particularly in an economy where a large number of customers experience financial instability.
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In order to address this, FairApp and similar platforms must establish strict identity verification and credit evaluation procedures. They may also consider forming alliances with Fintech businesses that specialize in credit scoring and credit bureaus. When thinking about implementing instalment payment systems, businesses should first assess their clientele to determine whether or not they need these kinds of payment choices. Companies can then collaborate with well-known platforms that provide the Infrastructure and support required to execute these solutions, such as PayFlexi or FairApp. Furthermore, it is imperative for enterprises to oversee the performance of instalment payments, evaluate the effects on sales, and implement any modifications.