SADC countries should copy Nigeria’s BVN to reduce bad debts

You wouldn't guess it but SADC countries are great when it comes to having their citizens pay back what they owe banks. There are two outliers in Angola and Mozambique who had non-performing loan (NPL) ratios of 23% (2021) and 13%(2023) respectively. These ratios are 3-6 times above the world average (5.5%) when it comes to non-performing loans.

Interestingly, Nigeria wasn't too different from these two countries with a NPL ratio of 14.8% in 2017. Fast forward 6 years and the most populous African country managed to drive it down to 4.85%. All of this got me wondering how countries with poor NPL ratios can take a book out of Nigeria's page given that technology played a big part in rectifying their bad-debt situation.

The launch of BVN

In 2014, Central Bank of Nigeria launched the Bank Verification Number (BVN) - an 11-digit number that acts as a unique identifier across all Nigerian banks. The number is tied to bank customers biometrics as they register fingerprints when getting the BVN issued. Each person is also limited to one BVN. This means customers with multiple bank accounts have to link all of them to that BVN they got assigned.

Upon it's launch in 2014, the Central Bank of Nigeria (CBN) would say the following regarding the technology: