Can Financial Courts Fix Nigeria’s Credit Access Problem?

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United Bank for Africa (UBA) Group Managing Director and CEO Oliver Alawuba has called for the creation of a special financial court in Nigeria, arguing that prolonged litigation in financial disputes is undermining credit access, increasing costs, and weakening economic growth.

Speaking at the 23rd National Seminar on Banking and Allied Matters for Judges, organized by the Chartered Institute of Bankers of Nigeria (CIBN) in Abuja, Alawuba urged the judiciary to consider setting up specialized financial courts, or commercial divisions within existing courts, to fast-track the resolution of banking-related cases.

“Time is key to financial justice. This seminar is not just timely, it is strategic. I hope that from this forum, we can advance a harmonized legal framework for financial dispute resolution across all jurisdictions,” he stated.

How Judicial Delays Hurt Credit Access

Nigeria’s banking system is weighed down by over ₦1.57 trillion in non-performing loans. According to Alawuba, much of this is linked to the slow pace of the legal process. He noted that delayed court proceedings create operational bottlenecks for banks and raise the risk profile of lending.

When disputes take years to resolve, banks become cautious. Borrowers face stricter conditions, while interest rates rise to account for legal uncertainty. Small and medium enterprises (SMEs), which rely on fast and flexible financing, are particularly affected.

What Kinds of Cases Are Delayed?

Financial disputes in Nigerian courts range from contract enforcement and loan recovery to cybercrime and fraud. Many of these cases involve technical or complex issues that general courts are not well-equipped to handle efficiently:

Loan default and recovery cases, which clog the courts and tie up capital.
Cybercrime and fraud-related disputes, which often involve digital evidence.
Contract breaches in banking and investment agreements.
Improper garnishee orders and Post-No Debit (PND) directives, sometimes issued by magistrates without financial expertise.
General commercial disputes between banks and customers or business clients.

Alawuba pointed out that judicial inefficiencies in resolving these cases increase the cost of capital, reduce credit access, and discourage lending, especially to high-growth sectors like SMEs.

Why Alawuba Wants a Specialized Financial Court

The proposal for a financial court is based on the need for faster, more expert adjudication of financial disputes. Alawuba said that similar systems have worked in other countries.

He cited examples such as Kenya and India, where the establishment of commercial divisions within existing court systems has helped improve dispute resolution timelines.

He also highlighted the importance of building judicial capacity in emerging sectors, including fintech, digital banking, and cybercrime.

“Digitization of judicial processes, building on the strides already made through e-filing and virtual court sittings, is necessary. Judicial capacity building in digital banking, fintech, and cybercrime will be essential as these sectors continue redefining financial intermediation.” he said.

Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.