In Nigeria It is Difficult to Access a Loan once you are Retired

During the launch of the Jolaade Adekola Initiative for the Retired Ageing and Aged (JAIRAA) event on 25th November 2021, Mr Harrison, a businessman brought attention to the fact that his bank did not grant him a business loan facility which he had previously had access to, claiming he was now unable to access the loan after he turned 60. 

“According to the bank officials, they do not grant loans to people older than 60 years old and I was not given an exact reason as to why this law exists’’. He concluded.

Retirement and ageing are global realities to which every individual is subjected. The retired, ageing and aged have however been subjected to limitations in society, particularly in Nigeria. 

According to the report on Access and Inclusion for the Retired Ageing and Aged in Nigeria, jointly published by JAIRAA and Dataphyte retirees have largely moderate access to banking services. 

However, the survey did not target or capture specific services like loans.

The operations desk of the United Bank of Africa said that the only age limit for applying for a loan is that the applicant must be at least 18 years. They explained that there was no rule stating that a person above a certain age could not apply for a loan although employment status of such an individual is part of the criteria.

The UBA staff further explained that the only reason Mr Harrison’s loan application might have been rejected was the ability to pay back. The bank official explained that the ability to pay back criteria considers whether the individual is earning a steady income or earning a salary. 

However, a more precise explanation was given from Wema bank. The help desk clearly stated that a retiree who does not receive salary cannot access loans according to the laid down procedure. They also stated that there were no loan facilities available for pensioners.  

Three of the four loan types advertised on Access Bank’s Website are connected to salaries, and they do not advertise loan facilities targeted at pensioners or retirees.   Zenith Bank has a loan facility that targets pensioners and it reads well until you get to the requirement of the pensioner receiving a pension of 500,000 per month. That number disqualifies the majority of the pensioners in Nigeria.  According to the report on access, only 7.8% of the retired ageing and aged population who participated in the survey earn between N100,000 and N250,000.

First Bank has many loan facilities although none that directly targets retirees or pensioners, most of the loan requirements will also be out of reach for pensioners whose average income according to the research is between N25,000 and N100000

Retirement age in Nigeria is 60 years or 30 years in service, this criteria that considers employment status rather than history of loan applicant might be construed as discriminatory to retirees who no longer have steady salaries except for pensions. In Mr.Harrison’s case, the only apparent reason for denial of the loan was his age, the known retirement age in Nigeria, especially since he is a businessman who had accessed similar loan facilities at different times until his age changed. 

Financial Inclusion especially as it concerns the older population is already a concern across the world, several news reports from countries like Australia, the United Kingdom and America discuss age discrimination issues in lending practices. 

In 2019, G20 countries released the Fukuoka Policy Priorities for Ageing and Financial Inclusion developed by the GPFI and the OECD, the policy focuses on issues of consumer protection and financial inclusion for the older population.

While it is within the bank’s right and in fact a responsibility to assess the ability of an applicant to repay a loan, care must be taken to avoid snap assumptions. For instance, assuming a person aged 60 is likely retired and unable to pay back a loan facility without taking into consideration his hcredit history amounts to discrimination. 

Among other recommendations, it is important for financial institutions like banks to design products and pay attention to product features as well as application of appropriate responsible lending criteria, to ensure financial inclusion and protection for the older population.