REGULATION | Nigeria’s Consumer Watchdog Says it is Impossible to Ban Loan Apps

According to the Federal Competition and Consumer Protection Commission of Nigeria (FCCPC), the calls for a complete ban on loan apps by some Nigerians are deemed practically impossible due to the operational nature of these apps.

In a local interview, the Chief Executive Officer of the Commission, Mr. Babatunde Irukera, said, aside from the fact that banning them totally would not solve the current challenges, the internet allows them to operate from anywhere in the world.

“For a business that can evade regulatory interfaces including operating entirely offshore, and possessing the versatility to evolve, rebrand, relaunch, rebirth, or relocate on the internet and needing no physical location, a ban is at best only a pronouncement, and may very well amount to nothing much more than that,” said Irukera.

According to Irukera, despite the recent registration exercise that involved over 180 digital lenders, some of the registered lenders have been found to create new apps to continue their unethical practices. Nonetheless, he noted that any company found guilty of creating new apps to engage in unethical practices will face serious consequences.

In November 2022, Google, which lists many of the loan apps through its PlayStore product, announced that for loan apps in Nigeria, Google requires they have a ‘verifiable approval letter’ from the Federal Competition and Consumer Protection Commission (FCCPC).

Irukera emphasized that completely eliminating loan apps and the potential they offer for financial inclusion and prosperity would result in excluding some of the most vulnerable members of society from accessing commerce and fulfilling critical needs during crucial times.

“The call for outright banning is ill-advised, and in most cases supported by former victims which is understandable, but insufficient for policy-making.”

The CEO of FCCPC highlighted that the registration of loan apps has brought those willing to operate ethically within the regulatory framework. By registering, these lenders demonstrate their commitment to conducting business in a responsible and lawful manner.

Nonetheless, even among the registered players, some are creating alternative channels outside of the Framework to do business.

“As we find those ones, we permanently, without opportunity for renewal or return, remove them from the list allowed to operate.”

The painstaking work of tracking businesses on the internet and holding them accountable is a global phenomenon and challenge that regulators and law enforcers are struggling with internationally.

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