Nigeria is cracking down on unregistered online money lenders who offer short-term loans with no security at high interest rates, according to the consumer protection agency, adding that it had asked Google to remove some lenders’ apps from its play store.
The lenders, dubbed “loan sharks” due to their aggressive recovery methods, charge interest rates of up to 45% per year. Applicants download an app, fill out a form, and are asked to give the lender access to their contacts for “risk management purposes.”
Millions of Nigerians who lack bank accounts or security to borrow turn to these lenders for loans starting at 2,000 naira ($4.76). Many people have taken to social media to complain about being harassed and having their contact information shared with third parties without their permission.
In an August 18 report, the Federal Competition and Consumer Protection Commission (FCCPC) stated that it had conducted search and seizure operations against at least five lenders.
According to FCCPC chief executive Babatunde Irukera, one of those targeted was Lagos-based Soko Lending Limited.
Irukera described Soko as “one of the most prolific actors in violating consumer privacy, fair lending terms, and ethical loan repayment/recovery practices.” He did not specify what was seized or recovered.
Soko did not respond to a written comment request.
Soko describes itself as a “simple, entirely online lending platform” that can process loan requests in five minutes.
Nigeria has the most fintech companies in Africa, with the majority of them offering loans. However, because of the lack of scrutiny, many businesses operated without regulatory approval, which the FCCPC hopes to change.
The FCCPC stated that it had asked Google Play to remove four lending apps that were circumventing investigations.
“For apps that are not on the Play Store, the commission is continuing to investigate what platforms they are hosted on in order to disable them,” said Irukera.
Payment systems Flutterwave, Opay, and Paystack, as well as mobile network operators, were ordered to stop providing platforms, hosting services, and connectivity to lenders, he added.
