Union Bank's ₦150m informal sector loans show how banks must redesign products for Nigeria's real economy

Union Bank disbursed over ₦150 million in cash flow loans to entrepreneurs in just three months of 2025 through its alpher program, specifically designed for Nigerians outside conventional banking—like market traders, artisans and cooperatives lacking formal pay slips or collateral. The initiative reached 71 businesses with ₦106 million in discounted credit, provided financial literacy to 230 individuals, and granted micro-grants to 59 previously unbanked entrepreneurs.

This matters because 26% of Nigerian adults remain financially excluded (EFInA 2023), with the informal economy being the nation's largest economic segment yet structurally underserved by banks built for salaried workers with monthly pay cycles and bureau credit histories. Traditional scoring models fail these productive enterprises not due to risk but architectural mismatch—products designed for a customer profile that doesn't reflect reality.

The significance lies in Union Bank's choice to redesign the product rather than wait for customers to fit existing models. This requires different underwriting, relationship management and patience—evidenced by the bank's internal inclusion culture (45% female board, extended parental leave). As the informal economy drives Nigeria's productive activity, other institutions must make similar architectural choices to remain relevant, building for the economy that actually exists, not the one conventional banking assumed.

SOURCE: https://www.premiumtimesng.com/promoted/872896-banking-the-economy-that-actually-exists.html