The National Institute of Credit Administration (NICA), chartered, has warned Board Credit Committees of business credit-granting organisations in Nigeria against complacency.
Prof. Chris Onalo, Registrar/Chief Executive Officer, NICA, issued the warning in a statement released in Lagos on Friday.
Onalo said that as guardians of an organisation’s credit risk management framework, the committees’ vigilance, expertise and proactive engagement were crucial for protecting their assets.
“As Nigeria democratises the economy to reflect a credit culture in order to empower various economic growth components for job creation, entrepreneurship and improved living standards, the stakes in credit management governance are high and the consequences of inaction or indifference are severe.
“Board Credit Committee members are expected to demonstrate an unwavering passion for upholding the highest standards of credit risk management in their oversight functions,” he said.
He decried the alarming trend of poor Board Credit Committee performance, which poses a threat to financial stability and organisational sustainability.
He urged the Boards of Directors of credit-granting business organisations to thoroughly review the performances of their Board Credit Committees.
He said that these reviews would help in identifying areas for improvement and implementing corrective measures for effective credit risk management and compliance with regulatory requirements.
The NICA boss called for continuous training and capacity building for Board Credit Committee members to equip them with the necessary skills for optimal performance.
“In addition, clear, unambiguous credit policy standards and procedures are recommended to support comprehensive credit management decision-making and efficiency.
“Board Credit Committee members can perform well only if their terms of reference, which outline roles, responsibilities and authority, are clear.
“Providing regular training and development opportunities for Board Credit Committee members to ensure they possess the necessary skills and knowledge must be a top priority,” he said.
Onalo also called for effective communication and transparency between the Board Credit Committee, the organisations’ top management, and other stakeholders for timely credit information sharing.
He said that expectations from Board Credit Committee members could be daunting in a fragile and sensitive economy.
He called for the engagement of the right professionals in Board Credit Committees for effective service delivery, in addition to regular meetings to review credit portfolios, discuss credit risks and make decisions.
He urged the Boards of Directors of organisations to address performance gaps in the Board Credit Committees’ roles and ensure that their credit management oversight functions comply with regulatory and industry requirements.(NAN)
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