The Federal Competition and Consumer Protection Commission (FCCPC) has placed 88 loan apps under its watchlist because of harassment and defamation of customers by unregistered lenders.
According to the FCCPC’s database, the number of loan apps under the watchlist rose to 88 from 55 in September 2023. Also, the total number of companies licenced to operate has grown to 263. This total includes those given full approval, conditional approval, and those licenced by the CBN.
Out of the approved companies, 215 have received full approval to operate as digital lenders, while an additional 38 have secured conditional approval.
In addition, the commission listed 10 other companies as licensed by the CBN, bringing the total to 263. The increase in digital lending approvals has been attributed to the booming fintech sector’s ease of entry, Gbemi Adelekan, President of the Money Lenders Association, said.
Adelekan stated, “While high-interest rates are specific to lenders offering small, short-term loans, the primary driver for the influx of new players is the entrepreneurial spirit in Nigeria, with even commercial banks obtaining separate digital banking licences to venture into digital lending.”
However, concerns have been raised about the increasing number of non-performing loans in the sector and the proliferation of illegal apps offering collateral-free loans with exorbitant interest rates. Some borrowers are resorting to borrowing from one app to settle debts with another, contributing to the rise in non-performing loans.
Digital lenders argue that interest rates are determined by the risk associated with the loans. Adelekan said that rates for installment loans have remained below 5 percent per month for the last two years. However, he acknowledges that nano loans, characterised by higher risks, may have interest rates of up to 15 percent.
Despite the growing number of registered digital lenders, unregistered players continue to thrive, attracting desperate borrowers. The FCCPC has placed 88 loan apps under its watchlist, addressing issues such as harassment and defamation of customers by unregistered lenders.
Adamu Abdullahi, acting executive vice chairman/chief executive officer of the FCCPC, recently revealed plans for new regulations to address challenges in debt recovery through loan apps.
“The aim is to strike a balance that safeguards consumers while ensuring responsible lending practices within the dynamic digital lending environment,” he said.
