• Tue. Sep 20th, 2022

Nigeria Takes Action Against Unregistered Online Money Lenders

ByChad J. Johnson

Aug 19, 2022

LAGOS, Aug 19 (Reuters) – Nigeria is cracking down on unregistered online money lenders who provide high-interest unsecured short-term loans, the consumer protection agency said, adding that it had asked Google to remove some lender apps from its Play Store.

Known as “loan sharks” for their aggressive collection methods, the lenders charge interest of up to 45% per year. Applicants download an application, complete a form and are asked to authorize the lender to access their contacts for “risk management purposes”.

Millions of Nigerians who have no bank account or collateral to borrow are turning to these lenders for loans starting at 2,000 naira ($4.76). Many have taken to social media to complain of harassment when they default and their contact details are shared with third parties without their approval.

Join now for FREE unlimited access to Reuters.com

Register

The Federal Competition and Consumer Protection Commission (FCCPC) said in an August 18 report that it had conducted search and seizure operations against at least five lenders.

One of those targeted was Lagos-based Soko Lending Limited, said FCCPC chief executive Babatunde Irukera.

Soko was “one of the most prolific actors in violating consumer privacy, fair lending terms and ethical loan repayment/collection practices,” Irukera said. He did not say what was seized or recovered.

Soko did not respond to a written request for comment.

On its website, Soko says it’s a “simple, fully online lending platform” and can process loan applications in five minutes.

Nigeria has the largest number of fintech companies in Africa, with most offering loans. But minimal scrutiny meant many operated without regulatory approval, which the FCCPC seeks to change.

The FCCPC said it asked Google Playstore to remove four lending apps, which circumvented investigations.

“For apps that are not on the Play Store, the commission continues to investigate which platforms they are hosted on in order to disable them,” Irukera said.

Payment systems Flutterwave, Opay and Paystack and mobile network operators have been ordered to stop providing their platforms and hosting or connectivity services to lenders, he added.

Join now for FREE unlimited access to Reuters.com

Register

Reporting by MacDonald Dzirutwe Editing by Chijioke Ohuocha and Mark Potter

Our standards: The Thomson Reuters Trust Principles.