Title: Digital lending in Nigeria: strengthened regulation to ensure transparency and protection of borrowers
Introduction :
The digital lending sector in Nigeria has been growing rapidly in recent years. However, this expansion has also led to high levels of debt and increasing default rates. To address these issues, the Federal Trade and Consumer Protection Commission (FCCPC) has stepped up its regulations to improve loan recovery methods in the country. In this article, we will examine the steps the FCCPC is taking to protect borrowers and ensure the stability of the digital lending industry.
Strengthening regulations:
According to the Managing Director of the FCCPC, Babatunde Irukera, the establishment of a solid regulatory framework is essential to improve loan recovery methods in the country. Despite the commission’s successes in reducing abuse and harassment related to lending apps, the digital lending industry continues to face high levels of debt from borrowers. Thus, it is crucial to also protect digital lenders from further losses arising from increased debt, which could lead to the collapse of these crucial players in the economy.
FCCPC Actions:
Over the past two months, the FCCPC has delisted 55 defaulted loan applications in Nigeria. In August 2023, the commission had already asked Google to remove 18 digital lenders from Playstore for non-compliance with the guidelines. Subsequently, 37 other digital lenders were blacklisted in September. These actors were guilty of operating without regulatory approval, thereby violating the Limited Regulatory Framework/Interim Registry and the Digital Lending Guidelines 2022. The success of this removal reduced instances of harassment by approximately 80% and defamatory messages in the sector.
An ethical approach to loan recovery:
Babatunde Irukera highlights the importance of implementing ethical loan recovery methods. He rejects the idea that the only way to communicate with borrowers is to harass and insult them. The FCCPC is actively working to educate the digital lending industry about the importance of treating borrowers with respect and dignity, while ensuring debt repayment.
Conclusion :
Strengthened regulation in Nigeria’s digital lending sector is a crucial step to protect borrowers and prevent abusive practices. By removing defaulted loan applications from the list, the FCCPC was able to significantly reduce instances of harassment and defamation. However, it is also important to maintain a balance to avoid jeopardizing the viability of digital lenders, which play a vital role in the country’s economy. By encouraging more ethical and transparent collection methods, the FCCPC aims to promote a more reliable and sustainable digital lending system in Nigeria.