This is an asymmetric attack: ‘Google has ordered loan apps in Nigeria and Kenya to provide proof of license to operate in the country, or risk being taken down from the Google Play store. This move according to Google was necessitated to protect borrowers from rogue loan apps, otherwise known as “loan sharks”, many of which charge borrowers outrageous interest rates as well as operating against legal provisions’.
This one will certainly work. The government has banned these companies and many continue to operate even though they are not registered or licensed or permitted. How do they get bank accounts opened? The government has gone to their physical offices and fought them. Yet, nothing has worked.
This playbook of using Google will certainly work because if the head is cut-off, the apps will fade. Yet, do not celebrate. While I do not support what these loan sharks are doing, we need to understand the circumstances which make them useful to some citizens.
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If you do not have money. If your bank does not believe in lending. If your network cannot offer any financial support. But you have a loved one in the hospital, and a loan shark is charging outrageous interest, but can help with fast funds, that should not be seen as stupidity on your side. There are many people who are fighting the economic crisis daily because they are poor. They live for hours and not days. These loans put them in a vicious loop but sometimes save the hours!
If the government thinks shutting down the loan apps is the solution, that is playing a short-term game. Indeed, there needs to be a mechanism to make sure these citizens do not need those solutions by offering them alternatives. Otherwise, kicking the apps out of Google does not help in the long term because they will continue to need those fire funds to live in the hours!
I ask you to permit me to write that the government is part of the problem. If there are decent alternatives for these citizens, loan sharks will not be necessary. So, no moral high ground here. Engaging Google will cut off these loan sharks but that does not mean the citizens have been helped. I still find it hard to understand why in this digital age, Nigeria cannot organize alternative credit systems to help people access credits in the formal banking system.
Comment on Feed
Comment 1: The move by Google is a step in the right direction, some of these loan sharks have taken undue advantage of desperate Nigerians, there’s need for serious regulations to enable genuine operators thrive and to protect the data and sanctity of debtors
Comment 2: How about the citizens that borrows money with the intention of never paying. Personal financial growth is the responsibility of the individual, and in most cases people don’t want to take decisive choices that we make them grow.
Comment 3: Insightful. I agree with this and I will like to add that, shutting them down on playstore is not enough measure, they can just go on and maintain websites to continue their venture.
The government should, as you’ve said, provide alternatives. Access to credit is very key to helping the poor out of poverty not only when they’re lives are at risks.
Comment 4: The online world needs to be regulated. Since the activities have moved to online. If it is not done lots of bad things will go on unpunished. Lending is a specialized field. You have to show that the government knows about your activities.
Comment 5: My understanding of their modus operandi,they do not carry out due diligence on their customers before approving the loans hence getting their money back becomes a problem. I lost my phone sometime in October last year at computer village around 3pm in the afternoon. I ran to the Bank to block my account. By the time I retrieved d line 3 days later, some one has used the phone number to borrow 10,000 naira from a loan shark company without my knowledge hence they started threatening me that I must paid back the loan which I refused. We are Valuers to lots of commercial banks in Nigeria and I can attest to it that they carry out due diligence before granting loans to their customers atleast on 90% scale. I support this moves by Google for them to show their evidence of license registration as a requirement for them to operate on the Google play store. These loan shark companies send ridiculous text messages on Whatsapp and sms to people claiming all sorts of nonsenses and harassments to claim their loan back
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Credit system is effective only when there’s capacity to repay, in our case, nobody believes that a poor can repay loans, so our formal financial institutions only lend money to those who already have money.
There is no easy way to fix the mess, since the economy is not working for the majority, the government is equally lacking capacity.
Taking the apps off Google store won’t stop the operators, it only affects the scale, but these things always happen at informal level, with P2P format, they can continue to operate anyway.
We just need a working economy, none of these chases or literatures can solve a desperate or hungry man’s problem, when your situation is dire, so many things don’t make sense anymore.