Recall that earlier this year, the Federal Government of Nigeria in a raid through its joint committee investigating rights violations and unfair practices, shut down some illegal online money lenders fondly called “Online loan Sharks”.
The government disclosed that most of these online money lenders did not register their platform with the Corporate Affairs Commission (CAC) and also engaged in activities that were against the rights of Nigerian consumers. Also, the interest rates charged by these online institutions violated the ethics of how lending is done.
Recently, the federal competition and consumer protection commission (FCCPC) has barred all financial technology companies (Fintechs) from providing payment or transaction services to online money lenders under its investigation.
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Some of the identified Fintechs such as Monify, Opay, Flutterwave, and paystack were said to be operating payment systems and providing services to online lenders under its investigation for not operating with applicable regulatory approvals. This is coming months after the federal government wrote to Google and Apple to delete loan apps breaching the country’s laws.
The executive chairman of FCCPC, Mr. Babatunde Irukera disclosed this during a chat with journalists while conducting an enforcement exercise on some of the digital money lenders in Lagos. He revealed that the commission has given an order to telecommunications and technology companies to stop providing servers or connectivity to these online money lenders.
Mr. Irukera further revealed that Soko lending appears to be the most consequential digital money lender in the country as they have fair lending terms and ethical loan repayment/recovery practices. The FCCPC boss also made a shocking revelation on how some of these online lenders who have been subjected to investigation devise methods to leverage technology and other financial services alternatives, to circumvent account freezing and app suspension.
He, therefore, stated that the commission has entered orders that will disable the violator’s ability to devise circumvention efforts.
See what he said;
“The information available to the commission demonstrates that Soko Lending appears to be the most consequential digital money lender with multiple apps and brand names.
“It is covering a significant share of the digital or online lending market, and one of the most prolific actors in violating consumer privacy, fair lending terms, and ethical loan repayment/recovery practices.
“Prior to this operation, the commission had previously, on March 11, 2022, carried out a similar enforcement action with respect to multiple lenders; which action and continuing investigation has reduced previously high and escalating unethical, obnoxious, and unscrupulously exploitative practices in the industry.
“With the operations today, the commission expects an appreciable additional reduction in these unacceptable practices. The commission has also today entered further Orders that will disable or diminish violators’ ability to devise circumvention efforts or alternative mechanisms to circumvent the objective of the investigation and protection of citizens.’’
Mr. Irukera did not fail to express gratitude to victims and citizens who gave vital information about these online lenders that aided their investigation, also welcoming vital information that will continue to aid the commission in the investigation.
This is a commendable move from the FCCPC by going after these Online money lenders fondly called Loan sharks, as a majority of them offer outrageous interest rates to customers, which often puts pressure on most of these customers due to difficulty in paying back. This is no doubt an unfair practice in the money lending industry which needs to be stopped.