Moniepoint Faces Loan Default Crisis Amid Aggressive Lending

Moniepoint Microfin Bank is currently facing significant criticism due to a surge in non-performing loans totaling ₦7 billion, which highlights the weaknesses in its aggressive lending strategy to small and medium-sized enterprises (SMEs). The bank, licensed by the Central Bank of Nigeria, has rapidly scaled its credit operations with a target to disburse ₦1 trillion to small businesses across Nigeria by 2025.

However, analysts warn that the pace of expansion may outstrip its risk controls, leading to visible cracks, particularly with high-profile defaults involving companies like Alerzo and Shoprite. Alerzo's loan of ₦5 billion quickly deteriorated, leaving an outstanding balance of ₦4.38 billion within a year, prompting Moniepoint to freeze the company's assets and initiate court action.

The bank's reliance on short-term, high-frequency SME loans has raised concerns about its ability to manage financial exposure and due diligence. The Central Bank of Nigeria has tightened credit rules across the sector, reflecting broader concerns about rising loan defaults and systemic risks.