Nigeria’s digital lending space has witnessed a call to action from financial expert Kalu Aja, who is advising Mobile Money operators and digital money lenders to exercise caution when offering credit to borrowers. In a recent statement, Aja emphasized the importance of adhering to the “ability to pay law” as outlined in the Central Bank of Nigeria’s Consumer Protection Regulations.
According to Aja, all loan apps in Nigeria must strictly adhere to this law, which requires lenders to assess a borrower’s ability to repay a loan before offering credit. He reiterated that if a borrower cannot repay, lenders should refrain from offering a loan. This statement comes amidst the Federal Consumer Protection Commission’s recent introduction of regulations aimed at addressing complaints surrounding the activities of digital money lenders and mobile money operators.
The commission’s new regulations are designed to promote transparency and fairness in the digital lending industry. Non-compliance with these regulations will attract sanctions, including fines of up to N100 million or 1 per cent of turnover, as well as potential disqualification of directors for up to five years. The move is expected to provide relief to consumers who have fallen prey to predatory lending practices.
The introduction of these regulations is a significant step towards regulating Nigeria’s digital lending space, which has grown exponentially in recent years. The lack of effective oversight has led to numerous complaints about unfair lending practices, prompting the need for intervention. With the new regulations in place, digital money lenders and mobile money operators will be required to operate within a more stringent framework, prioritizing consumer protection and responsible lending practices.
As the digital lending industry in Nigeria continues to evolve, the emphasis on responsible lending practices is likely to remain a key focus area. The Federal Consumer Protection Commission’s regulations are expected to have a positive impact on the industry, promoting a more sustainable and consumer-centric approach to digital lending. By prioritizing transparency, fairness, and consumer protection, Nigeria’s digital lending space can continue to grow and develop, providing valuable services to consumers while minimizing the risks associated with predatory lending practices.
