Imagine a world where access to credit isn’t just a privilege for the fortunate few but a foundational layer of everyday life—like clean water or electricity. Now, hold that thought and ask yourself: why is it that in a country with over 200 million people, borrowing money still feels like climbing a mountain while blindfolded?
The truth is, the infrastructure for enabling seamless credit access has been broken for decades, not just in Nigeria but across most of Africa. Enter OCEN—Open Credit Enablement Network—a revolutionary framework that promises to democratize credit access, especially for underserved and excluded communities.
At first glance, OCEN seems like the perfect solution to Nigeria’s lending conundrum. It leverages technology to bridge the gap between lenders and borrowers, creating a network where credit is embedded directly into services people already use—think of getting a loan while shopping online or booking a ride. It’s open banking but for credit, built on APIs and standard protocols.
But here’s the catch: for OCEN to work in Nigeria, it needs to align with open banking, another transformative idea that’s gaining traction. The real question isn’t whether OCEN could fit into Nigeria’s financial ecosystem but whether our ecosystem is ready for it.
So, could OCEN and open banking combine forces to redefine credit access in Nigeria? Let’s dig deeper.
First, what is OCEN?
OCEN is short for Open Credit Enablement Network. Born in the crucible of India’s fintech revolution, OCEN emerged in 2020 as a bold initiative to democratize credit access, particularly for the underserved Micro, Small, and Medium Enterprises (MSMEs).
The brainchild of iSPIRT, a think tank renowned for its role in developing India’s digital public goods, OCEN was designed to reimagine the lending value chain. It introduced a standardized API framework that seamlessly connects lenders, Loan Service Providers (LSPs), and borrowers, effectively creating a ‘UPI for credit’.
The motivation? A staggering credit gap of approximately ₹17 trillion, with 85% of MSME lending needs unmet.
Traditional lending models, bogged down by high acquisition costs and rigid processes, were ill-equipped to serve the dynamic needs of small businesses. OCEN sought to dismantle these barriers by embedding credit into everyday digital platforms, from e-commerce to logistics, making access to finance as intuitive as sending a message.
In Nigeria, the conversation around OCEN is gaining momentum. With a vibrant fintech ecosystem and a significant unbanked population, the parallels are hard to ignore. Pioneers in the Nigerian financial sector are exploring how OCEN’s principles could be adapted to local nuances, aiming to bridge the credit gap that stifles entrepreneurial growth.
The trajectory is promising. As digital platforms proliferate and open banking frameworks take shape, integrating OCEN could revolutionize credit distribution in Nigeria. With standardized APIs, lenders can efficiently reach underserved segments, offering tailored credit products that fuel economic development.
In essence, OCEN represents a paradigm shift—a move towards an open, inclusive financial ecosystem where access to credit is no longer a privilege but a right. As Nigeria stands on the cusp of this transformation, the lessons from India’s OCEN journey offer a compelling blueprint for success.
Could OCEN work with Open Banking in Nigeria?
Now, this is where things get interesting. OCEN and open banking—these two have the potential to redefine financial services. But could they tango in Nigeria? To answer that, let’s strip this down to its bones and attack the question from every angle: technical, regulatory, cultural, and market dynamics.
The technicalities: APIs and ecosystem compatibility
On paper, OCEN and open banking seem like soulmates. Open banking is all about API-driven data sharing between banks and third parties. OCEN? It’s an API framework that connects lenders, Loan Service Providers (LSPs), and borrowers. Both hinge on standardization, interoperability, and open ecosystems.
Nigeria already has a head start. The Central Bank of Nigeria (CBN) released the Open Banking Regulations in 2021, creating the legal scaffolding for secure data sharing. This framework encourages collaboration among banks, fintechs, and developers—just what OCEN needs to thrive.
If integrated, open banking could provide the data layer (transaction histories, spending patterns, etc.) that powers OCEN’s credit decisions. Imagine a world where your spending habits on a digital wallet like Paga or Kuda directly translate into better loan terms.
The challenge? Integration. APIs are like plumbing—they’re useless unless the pipes fit perfectly. OCEN’s architecture must harmonize with Nigeria’s existing open banking protocols. This demands not just technical precision but also alignment among stakeholders. And in Nigeria, alignment is often as elusive as a NEPA transformer during harmattan.
The regulatory quagmire
OCEN thrives on open ecosystems, but Nigeria’s financial regulation is, well, conservative. CBN, for all its forward-thinking policies, often defaults to bank-specific regulations that excludes non-banking entities. Will regulators embrace a model where non-bank entities (e.g., logistics platforms or ride-hailing apps) act as LSPs? That’s uncertain.
OCEN also demands robust data privacy frameworks, given the sensitive nature of credit-related data. Nigeria’s Data Protection Regulation (NDPR) is a good start, but without airtight privacy standards, OCEN could become a hacker’s playground—or worse, erode trust in digital lending altogether.
Cultural and behavioral hurdles
Nigerians are skeptical of financial systems. Years of unregulated microloan sharks have left scars. People fear hidden fees, predatory rates, and data misuse. For OCEN to succeed, it must prioritize transparency. Borrowers need to see clear, upfront terms—no fine print, no “gotchas.”
Then there’s the issue of financial literacy. Embedding credit into apps sounds great, but how many Nigerians understand APRs, amortization, or creditworthiness? Without education, OCEN could inadvertently exacerbate debt cycles rather than solve them.
The marketing dynamics
If OCEN takes off, it could disrupt Nigeria’s banking oligopoly. Traditional banks, long accustomed to dictating lending terms, may resist a model that levels the playing field for fintechs and startups. This resistance could manifest in lobbying, anti-competitive practices, or outright refusal to collaborate.
On the flip side, Nigeria’s vibrant fintech scene—home to giants like Flutterwave and Paystack—could champion OCEN. These players understand APIs and are hungry for innovation. With the right incentives, they could become the backbone of Nigeria’s OCEN implementation.
The case for optimism
Despite the hurdles, the potential rewards are enormous. Nigeria has a massive MSME sector—41 million businesses, contributing 48% of GDP. Yet, less than 10% have access to formal credit. OCEN, integrated with open banking, could unlock trillions of naira in economic activity.
Imagine a market woman in Yaba using her payment history on Opay to secure a microloan. Or a small-time exporter in Aba leveraging his logistics data from GIGL to qualify for credit. This is the power of embedding credit into everyday transactions, and Nigeria is ripe for it.
So, can OCEN work with open banking in Nigeria?
The answer is a cautious yes. The technical pieces exist, the regulatory framework is evolving, and the market need is undeniable. But execution will be key. Stakeholders must align, trust must be rebuilt, and infrastructure must be rock-solid.
In the end, it’s not just about APIs or protocols—it’s about creating an ecosystem where credit is seamless, fair, and accessible to all. If we get it right, OCEN and open banking could be the fintech love story Nigeria has been waiting for.
Now, over to you, Nigeria.
