Access to credit is the lifeblood of business growth, yet many Nigerian enterprises continue to face hurdles in securing the financing they need. From small artisans to large-scale manufacturers, access to affordable, reliable credit is essential for turning business investment dreams into reality.

While governments and financial institutions have made strides in supporting businesses, rigorous evaluation processes and financial challenges often stand in the way. A key factor behind these difficulties is credit risk assessment, a process that allows financial institutions to evaluate the likelihood that a borrower may default on their obligations.

Credit experts emphasise that credit risk assessment is not a barrier to lending, but rather a safeguard for both the bank and the borrower. It is a sophisticated, multi-layered process that combines advanced technology with human expertise to evaluate a business’s financial health, operational model, and market potential.

“A thorough credit assessment is the cornerstone of responsible banking. It ensures that loans are granted on a sustainable basis, setting businesses up for success rather than over-indebtedness,” explained a Chief Risk Officer at a leading bank.

Beyond balance sheets, lenders now increasingly consider a borrower’s reputation, operational strength, and track record. Consistent repayment history, disciplined financial management, and transparent governance significantly improve a business’s ability to secure financing.

Recent industry data shows that Nigeria’s banking sector has made measurable progress in strengthening financial health. Non-performing loan (NPL) ratios have generally improved across tier-one banks, indicating better risk management and credit recovery. For example:

• One bank reported an NPL ratio of 2.8%, demonstrating strong asset quality.
• Another recorded 3.0%, down from prior periods through write-offs and portfolio monitoring.
• A first-generation bank improved its ratio to 8.5%, reflecting continued but slower progress.

These trends indicate that banks are balancing growth with caution, ensuring that funds are allocated to credible, viable businesses while minimizing systemic risks.

Experts note that effective credit assessment is crucial for sustainable lending. High impairment charges (N1.96 trillion across top banks in 9M 2025) underscore the need for diligence, yet strong risk management has mitigated potential disruptions.

With more robust lending frameworks, banks can provide financing to SMEs and locally owned enterprises, supporting domestic production and advancing the “Made in Nigeria” agenda. Prioritising local businesses delivers broader economic benefits, including job creation, innovation, and a more resilient banking sector.

In conclusion, while access to credit remains a challenge for many Nigerian businesses, meticulous credit risk evaluation safeguards the system and ensures long-term stability. A thriving ecosystem of well-supported, financially disciplined enterprises is indispensable for sustainable national economic growth.