Why serving more borrowers, doing it right, and staying compliant are not three separate goals — they are the same one
Every lender in Nigeria should be uncomfortable with Nigeria’s current credit inclusion rate of 3%. That is the share of adults who have accessed formal credit, against a CBN target of 40%. In a country with over 230 million people, a fast-growing working population, and one of the most active fintech ecosystems in the world, formal lending has barely scratched the surface of actual demand.
The credit gap is not a mystery. It currently stands at approximately ₦24 trillion, the distance between what Nigerians need to borrow and what the formal system is willing to give them. And yet, month after month, lenders tighten their criteria, rely on bureau data that covers only a fraction of the population, and walk away from borrowers with the intent and ability to repay simply because the system was not designed to see them.
This article explores why that approach is not just a social failure, but a business one. And why the most commercially rational, sustainable, and legally sound path forward for Nigerian lenders is also the most inclusive one.
Let’s get into it!
The Market You're Ignoring Is Bigger Than the One You're Serving
Let’s start with the numbers. Nigeria processed nearly 11 billion transactions through the NIBSS Instant Payment platform in 2024, more than double the roughly 5 billion transactions recorded in 2022. The infrastructure and activity are there, and the demand is undeniable.
But look at who sits outside formal credit. In 2024, 92.7% of Nigeria's labor force was engaged in informal employment, including market traders, artisans, gig workers, transport operators, and small business owners who earn real income but leave no trail that traditional credit models can read.
The informal sector accounts for about 90% of all new jobs and 50% of the nation's GDP. These are not marginal people. They are the backbone of the Nigerian economy.
Credit use in Nigeria has doubled to 6% according to the EFiNA 2023 survey, yet this remains well below the 2024 target levels. The growth is real, but the ceiling is still catastrophically low. The lenders who figure out how to accurately assess and responsibly serve this segment will be capturing a market that their competitors are voluntarily abandoning.
New statistics from the Global Emerging Markets Risk Database Consortium, analyzing around 15,000 loans to private companies in developing economies over 30 years, reveal that the risk of investing in emerging market businesses is lower than commonly perceived.
Thus, the assumption that serving underserved borrowers entails accepting catastrophic risk is not well supported by evidence. What it actually requires is better, more accurate risk assessment, not blanket exclusion.
Exclusion Doesn't Make You Safer but Smaller
Here is the argument that most lenders miss: turning away thin-file or informal-sector borrowers does not eliminate risk. It just relocates them.
When formal lenders refuse to serve a creditworthy borrower, that borrower does not stop needing money. They go to informal moneylenders, loan sharks, or, increasingly, predatory digital loan apps.
Consumer credit outstanding in Nigeria reached ₦3.82 trillion by December 2024, a 21.27% increase from September, with personal loans disbursed in Q4 alone amounting to approximately ₦470 billion. Survival finance has become a mass market.
But look at how parts of that market are being served. The Citizens' Gavel civil society organization has received at least 1,300 complaints over predatory digital loan apps, with borrowers subjected to harassment, public shaming, and illegal access to personal data when they default.
Some loan apps have charged interest rates as high as 600% per annum. These are not fringe players serving a few desperate people. They are operating at scale, exploiting the gap left open by responsible lenders.
Every excluded borrower who ends up in a predatory lending cycle is financially destroyed, less able to repay future credit, less trusting of formal institutions, and less likely to ever become a good customer of the formal system. Exclusion does not protect the market. Over time, it erodes it.
Research published in IMF Working Papers found that in developing and emerging economies, credit expansion is linked to lower commercial banking risk, underscoring the benefits of loan portfolio diversification.
Including numerous, small, and diverse borrowers allows lenders to reduce concentration risk and the large, unpredictable losses that come with it. Inclusion, done properly, is actually a risk management strategy.
The Ethics Are Not Separate From the Business Case
This is the insight that tends to get lost when people treat ethical lending as a CSR conversation rather than a commercial one.
Ethical lending, at its core, means three things: assessing borrowers accurately, pricing credit fairly, and collecting responsibly. None of these is an act of charity. Each one directly improves your business outcomes.
Accurate assessment
This means fewer false negatives. That is, creditworthy borrowers you're wrongly rejecting, and fewer false positives, risky borrowers you're wrongly approving. Better data, better models, and alternative credit signals produce better portfolios. The ethics of not excluding qualified borrowers and the business case for reducing default rates are the same argument.
Fair pricing
This means sustainable borrowing. A borrower who can afford their repayments is far less likely to default than one who was pushed into a loan at an exploitative interest rate. When a lender charges rates that make default inevitable, they haven't made a profit; they've manufactured bad debt.
The FCCPC's new regulations explicitly require lenders to conduct adequate credit assessments to ensure borrowers can repay loans sustainably. The regulator is now codifying what good lenders already knew: affordability is a lending standard, not a concession.
Responsible collections
This protects your reputation and your borrower base. A customer who is treated with dignity during financial difficulty is far more likely to return, repay what they can, and recommend your platform.
On the other hand, a customer who is harassed and shamed, and whose contact list is weaponized against them, is a liability to your brand, your regulatory standing, and the trust of the entire sector.
What the Regulator Is Telling You
The Nigerian regulatory environment in 2025 and 2026 has sent a clear and consistent message to lenders, and it is not one that feels like a burden. It is actually a roadmap.
In September 2025, the FCCPC officially issued the Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations (DEON Consumer Lending Regulation) 2025, establishing a comprehensive framework that mandates transparency, fairness, responsible conduct, data privacy, and accessible redress mechanisms. This is not the CBN or FCCPC being hostile to lending. It is the regulator drawing a line between the lenders building this market and the ones burning it down.
The DEON regulations explicitly prohibit lenders from accessing borrowers' contact lists, call logs, and photos, which are the exact tools predatory apps use to harass and shame defaulters. It mandates clear loan term disclosure, transparent pricing, and complaint resolution within 24 to 48 hours.
Non-compliant operators face sanctions including fines of up to ₦100 million or 1% of turnover, as well as potential disqualification of directors for up to five years. By January 2026, 45 loan apps had already been blacklisted for failing to comply with consumer protection and data privacy regulations. The FCCPC is not bluffing.
At the same time, data-driven inclusive lending sits squarely within Nigeria's data protection framework. The Nigeria Data Protection Act (NDPA) 2023 requires that consent be informed, specific, freely given, and unambiguous before any personal data, including financial data, is processed.
For lenders using open banking and alternative data to assess borrowers, this is not a barrier. It is the framework that makes consent-based financial data use legitimate, defensible, and trusted by the borrowers who grant it.
Lenders who build their credit assessment infrastructure on consented data, transparent processes, and fair outcomes are not just compliant. They are protected from regulatory sanctions, reputational damage, and the portfolio deterioration that predatory practices inevitably produce.
The CBN's National Financial Inclusion Strategy aims to reduce financial exclusion to 25% by 2024 and has since set a longer-term target of 95% inclusion. The CBN Governor has called for a concrete commitment to achieving 95% financial inclusion and has charged all implementation agencies to establish dedicated functions to drive progress.
Every lender that responsibly expands access to credit is operating in alignment with the country's highest-level financial policy objectives, which means the regulatory wind is at the back of inclusive lenders, not in their face.
What Inclusive Lending Looks Like in Practice
The business case and the ethical case both converge on the same operational requirements. Here is what responsible, inclusive lending looks like when you build it properly:
Consent-based alternative data
Use open banking transaction data, BVN-linked financial history, and cash flow analytics, all with explicit borrower consent under NDPA, to build accurate risk profiles for borrowers who have no bureau history. This expands your addressable market without lowering your standards. It replaces bad data with better data.
Risk-based pricing, not blanket rates
Price loans based on verified repayment capacity and actual risk, not on segment assumptions. Borrowers who demonstrate income consistency and financial discipline in their transaction histories should not be charged the same rate as high-risk borrowers. Accurate pricing is both fairer and more profitable.
Proportional loan sizing
Start with amounts that match demonstrated affordability. A borrower who repays a small loan on time has just given you the most valuable thing in lending: behavioral data. Build the relationship, build the credit history, and grow the loan size as trust is established. This is portfolio management.
Human-centered collections
Build collection processes that treat default as a financial problem to be solved, not a moral failing to be punished. Payment plans, early intervention, and respectful communication are not soft; they recover more money than harassment does, without destroying the customer relationship or attracting regulatory attention.
The Competitive Moat Is Being Built Right Now
The strategic reality is that the lenders who are building inclusive, ethical, compliant lending infrastructure today are not just doing the right thing. They are building the moat.
When accurate, consent-based credit assessment becomes the standard, as regulations are increasingly requiring, the platforms that already have this infrastructure deployed will have a meaningful lead over those scrambling to build it.
When borrower trust becomes the differentiating factor in a crowded lending market, institutions that have never abused their customers' data or dignity will have an unbuyable loyalty advantage.
Nigeria's lending market is enormous and underserved, and is being actively shaped by regulation toward more responsible practices. The lenders who treat inclusive lending as a burden to be managed will spend the next several years catching up to the ones who treated it as the opportunity it always was.
The ₦24 trillion credit gap is not a problem, but a market, and it belongs to whoever is willing to serve it properly.
How Zeeh Enables Inclusive Lending at Scale
Inclusive lending depends on seeing what traditional systems miss. Zeeh gives you access to consent-based financial data, identity verification, and behavioral risk signals on a single platform.
Instead of relying only on credit bureau records, you can assess real income, cash flow patterns, and repayment capacity directly from bank transactions. This allows you to underwrite thin-file applicants with more accuracy while reducing false rejections.
At the same time, through ZeehID, you can ensure every borrower is verified through BVN, NIN, and biometric checks, helping you stay compliant with evolving requirements from the Central Bank of Nigeria and data protection regulations.
The result is that you approve more qualified borrowers, detect risk earlier, and scale lending without compromising compliance or portfolio quality.
If you’re looking to expand your loan book without increasing risk or falling short on compliance, Zeeh gives you the infrastructure to do it. Book a demo to see how you can assess thin-file applicants more accurately, reduce false rejections, and build a more inclusive, profitable lending operation.
