The number of companies approved to provide loans to Nigerians through digital platforms popularly known as loan apps has surged to 380 this February from 320 in October last year.
The 380 companies now serving the digital loan market have secured approval from either the Federal Competition and Consumer Protection Commission (FCCPC) or a license from the Central Bank of Nigeria to provide the service.
A look at the FCCPC database shows that 322 of the digital lenders have been granted full approval by the Commission, while 42 others are operating with conditional approval.
The database also includes 16 companies licensed by the CBN, bringing the total number of approved digital lenders to 380.
Growing concerns
Meanwhile, as the number of digital lenders is growing, there have also been rising concerns over the mode of operations of some of the companies.
- Aside from the issue of high interest rates charged by the lenders, consumers are now wary of what they described as shady practices by some of the lenders.
- In some instances, users of the apps claim they have loans forced on them while in other cases, the apps automatically increase their loans beyond what they requested, thereby increasing their debt burden.
- For some of the licensed apps, the use of harassment and threats, which are characteristic of loan sharks (unregistered loan apps) are still being deployed to recover debt.
Sharing her experience with one of the popular digital lenders, a customer, Ijeoma, said she had clicked on the app she regularly used to take a loan of N100,000 but later realized she was given N1 million.
She called customer care to complain about what had happened and she was asked to pay N1.118 million within three days to liquidate the loan, meaning she would be paying an extra N118,000 to return the money she did not request.
For Tola, there was a case of unsolicited loan by another popular licensed loan app company and he had to pay with interest.
“Two months ago, a flash notification came up on my screen, when I checked it, I discovered that I had been given a loan of N100,000 to repay N130,000. I didn’t request the loan, even though I had used the app before.
“All efforts to return the money proved abortive, I had to repay the loan over time and deleted the app after,” he shared.
Loan app workers’ target and forced loans
Nairametrics earlier reported the accounts of some workers in a popular loan app company, who narrated how they were being forced to push out unsolicited loans to people through their targets.
According to them, the mandate from their employers is to get loans disbursed to as many people as possible on a daily basis and by all means.
- And that comes with a target that must be met: For some daily conversion is 20, while others have it as high as 35 and the target often becomes higher as the need arises, according to the agents.
- Conversion in the loan app parlance means the number of people each agent disbursed loans to on a daily basis.
- To arrive at the conversion, each agent is given 270 mobile numbers of potential borrowers every day, the first target is to achieve at least 90 connects, this means that out of those 270 phone numbers, some of which may be switched off or no longer in use, they must be able to talk to at least 90 people, from which they must get at least 20 people to disburse loans to.
Regulating beyond licensing
While the FCCPC is currently playing the role of regulator in the digital lending space, stakeholders said the Commission would need to step up beyond registering and granting approval to digital lenders and start proper policing of their operations.
“It is not enough to issue a licence or grant approval based on the fact that they have met certain conditions set by the FCCPC, the regulator needs to monitor these lenders and ensure that they are operating in ethical ways, especially, how they disburse loans and how they recover their loans,” said Mr. Gbolagunte Ajayi, a financial analyst.
He added that many of the licensed loan app companies are engaging in the same unethical practices that loan sharks are known for, but the FCCPC seems to be oblivious to this.
What the FCCPC is saying
However, the FCCPC said it has continued to monitor the digital lending space and the regulatory activities have led to the delisting of 47 loan apps from the Google Play store, while 88 are currently under its watchlist.
- According to the Executive Commissioner of Operations at the FCCPC, Dr. Adamu Abdulahi, the main aim of the registration and approval of digital lenders in the country is to identify the companies behind the apps through its Interim Regulation to be able to hold them responsible for any infraction.
- He noted that before the regulation, there was no way to trace any of the companies operating the loan apps.
- Abdullahi said the Commission is also trying to strike a balance between the continuous operations of the loan apps and the customers’ defaulting in repaying their loans, adding that despite the challenges, loan apps are playing important roles in the economy.
This report is produced under the DPI Africa Journalism Fellowship Programme of the Media Foundation for West Africa and Co-Develop.
