Chijioke Dozie, the co-founder & CEO of Carbon, one of the licensed digital lending platforms in Nigeria, has said that many Nigerians patronise loan sharks because they do not understand the difference between regulated and unregulated ones.
According to him, at the point of seeking loans, many are only interested in any platform that can give them the money and care less about whether such loan app is regulated or not.
While noting that the loan sharks challenge is a global issue as there are people who would always want to prey on vulnerable people in every society, Dozie said that knowing the difference between the regulated and unregulated platforms would deter many from patronizing those that would be blackmailing them to retrieve loans.
To address this challenge, Dozie said the Central Bank of Nigeria (CBN) would have to embark on financial education to let Nigerians know the implications of taking loans from unlicensed operators.
What Carbon CEO is saying
Speaking on the menace of loan sharks in an interview with Nairametrics, Dozie said: “This is an issue that is happening across the world. And this is because there are people that will always want to prey on vulnerable people in every society. If you look at India, for instance, the country recently shut down over 100 Chinese apps. The Reserve Bank of India is also tackling this problem. So, this is not unique to Nigeria.”
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“The reason this continues to be a challenge is that Nigerian customers don’t differentiate between a regulated lender or bank versus a non-regulated lender. They just want money. For instance, If I want N200,000, my concern is who is willing to give it to me. I don’t care whether regulated or not regulated.
“This is also a problem for us that are regulated because people see us as the same as the loan sharks. We’re regulated, we have to go through CBN examinations and we do CBN returns every year. As a regulated lender, before we give out loans, we have to check whether you are credit-worthy or not through the credit bureaus. A lot of these unregulated guys aren’t doing any of these things,” he stated
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“So, I think what the regulator can do to help us is financial education. We need a lot of financial education for Nigerians to understand these things and know the difference between regulated lenders and loan sharks. With financial literacy, we will not totally eliminate loan sharks but hopefully, we will reduce the incidences in the future,” he added.
What you should know
- The Nigerian government has continued to clamp down on the unregulated lending companies known as loan sharks through the Federal Competition and Consumer Protection Commission (FCCPC)
- In its latest action, the Commission ordered Google to remove 4 loan apps, which include Maxi Credit, Here4U, ChaCha, and SoftPay from its Play Store. These apps were discovered to be among those blackmailing their borrowers and engaging in other unethical practices.
- However, operations of the loan sharks continue despite the government’s efforts. While some platforms are not even listed on the app stores to avoid clamping down, several new apps are coming up by the day claiming to provide collateral-free loans to Nigerians.