Some experts including the representatives of the Federal Competition and Consumer Protection Commission (FCCPC); Nigerian Communications Commission (NCC); and the Lagos State Consumer Protection Agency (LASCOPA) have reinforced the need for proper regulation of digital lending and borrowing.
This happened at the recent Consumertrics workshop, themed Responsible Borrowing and Lending: Balancing Access to Credit and Consumer Protection in Nigeria Digital Economy, held in Lagos.
In his opening remarks, Muyiwa Ayojimi, the CEO of Consumertrics, said access to credit was essential to economic wellbeing of the citizens but deplored the barriers created by traditional lending banks. Some of the consequences, he said, included preventing willing participants from entering the country’s expansive credit market. “This is why the payday lenders are stealing the limelight,” he said. Ayojimi said it was important for regulators to take urgent action that will protect borrowers from consumer breaches by irresponsible lenders.
The keynote speaker at the workshop, Mr. Babatunde Irukera, who is the CEO of the Federal Competition and Consumer Protection, (FCCPC), said the agency would continue to hunt illegal loan sharks, in order to stop the abuse.
Irukera, who spoke through his representative Mr. Marvin Nadah, the deputy director (Enforcement and investigation, FCCPC) stated that the activities of many digital lenders violate Section 17 of the FCCPC Act. Nadah explained that the impact of Covid 19 on most Nigerians led to desperate need for fund, especially credit. According to him, the situation resulted in the proliferation of unregister digital lenders, who equally cashed in on the prevailing unemployment crisis to recruit loan sharks. The situation, he said, created a number of challenges that the FCCPC is working to correct. These, he mentioned, include digital lenders charging excessively “high interest rate on loans; compound interest charged as default fee, and unethical loan recovery methods.”
Nadah said a special taskforce that include the FCCPC, Central Bank of Nigeria (CBN), Nigeria Data Protection Bureau, and other relevant government agencies, are collaborating to ensure digital lenders get registered and comply with regulatory laws.
On his part, the Executive Vice Chairman of the Nigerian Communications Commission (NCC) Professor Umar Dambatta, emphasized effective regulation by relevant agencies. He spoke through Mr. Clem Omife, the deputy director, consumer affairs of the NCC. Omife said the agency is part of the joint taskforce, which ultimate focus is enshrining a regulatory framework. He added that Nigeria need to take a cue from Kenya where credit offering financial technologies platforms are registered and effectively regulated.
In his contribution, Ridwan Oloyede, a data protection expert, urged the digital lenders to conform to the relevant data privacy laws in the country. He said the some lenders use software development kit that enables monitor their borrowers’ real-time activities, thereby invading their privacies.
Oloyede, who is the co-founder, Tech Hive Advisory, said that a research conducted by his firm on 30 digital lenders confirmed their involvement in infiltration of customers’ data privacies. He equally urged borrowers to be wary of permissions they grant digital lenders on their mobile phones.
Recalling a personal experience, another panelist Mr. Clem Baiye said a lender once harassed him over a loan he knew nothing about. Baiye, a former national commissioner of the NCC, said the said lender telephoned him, saying he guaranteed a loan and the loan was due. But, Baiye, now an independent director at the Transmission Company of Nigeria (TCN), said he was mistaken for another person who bore the same name as his. He explained the aggressive recovery method of such lenders was deep-rooted in the traditional practices of loan sharks in the country. To him, the lenders offer a service of value and that there was need for both borrowers and lenders to fulfill transact responsibly.
Olawale Eleto, the head of credit analysis for business banking, Union Bank of Nigeria Plc, opined that the digital lenders operating in the country are inadequate, giving the need by MSMES for business finance. He said, though regulation is important, more digital lenders should be encouraged to participate in the credit market because of the MSMES funding gap. Eleto added some borrowers approach the lenders with the intention to defraud and default on their borrowing.
Other panelists, who spoke at the workshop, included Dr. Jamelaah Sharieff-Ayedun, managing director of CreditRegistry; Mr. Femi Daniel, Mastercard’s lead regional privacy counsel (for Eastern Europe, Middle East, and Africa).
