Despite the ongoing clampdown by the Federal Competition and Consumer Protection Commission (FCCPC), several unregistered loan apps have found a way to continue their operations in Nigeria through Android Package Kit (APK) distribution. As of May 2024, the FCCPC has delisted 47 of these unregistered apps from the Google Play Store. However, investigations reveal that many of these apps persist in reaching their target customers by bypassing official app stores and distributing their software directly as APK files. The APKs are shared in the form of a link which once clicked takes the user to a file to download an app not listed on any app store.
However, despite the Federal Competition and Consumer Protection Commission's (FCCPC) efforts to regulate the digital lending space in Nigeria, harassment and defamation of borrowers by loan apps continue unabated. The Chairman of the Money Lenders Association, Mr. Gbemi Adelekan, attributes these unethical practices primarily to unregistered loan apps. He explains that many of these apps, delisted from the Google Play Store, are now using Android Package Kit (APK) to circumvent regulatory compliance, exposing borrowers to unchecked harassment.
Mr. Adelekan points out that these unregistered apps often push unsolicited loans onto people and then resort to unethical methods to recover the debt. Unlike the registered and licensed Digital Money Lenders (DML) who adhere to legal and ethical lending practices, these unregistered operators exploit loopholes and engage in illegal recovery tactics. This unregulated environment allows them to employ threatening and coercive strategies without fear of repercussions from regulatory bodies.
Furthermore, Mr. Adelekan emphasizes that the majority of licensed DMLs operate within the bounds of the law, following established lending principles and regulations set by the FCCPC. However, the presence of unregistered and unscrupulous lenders tarnishes the industry’s reputation and undermines efforts to establish a fair and transparent lending ecosystem in Nigeria.
The FCCPC has also noted an increase in complaints and infractions as more Nigerians turn to these digital lending platforms for loans. In response, the FCCPC has expanded its monitoring efforts, placing 88 additional apps on its watchlist. This action complements the earlier delisting of 47 apps from the Google Play Store in collaboration with Google, aiming to curb the proliferation of illegal and unethical lending practices.
Dr. Adamu Abdullahi, Acting Executive Vice Chairman and Chief Executive Officer of the FCCPC, emphasized that the Commission is stepping up its efforts to address these issues. Beyond regulatory prohibitions and consequences, the FCCPC plans to involve law enforcement agents to tackle the problem more effectively. This multi-faceted approach is intended to strengthen the enforcement of regulations and protect consumers from the predatory tactics employed by some loan apps, thereby ensuring a safer and more ethical lending environment in Nigeria.
The FCCPC, under Babatunde Irukera's leadership, introduced the Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending in 2022. This initiative, developed in collaboration with the Joint Task Force (JTF), aims to ensure fair, transparent, and beneficial lending opportunities for Nigerians. The framework was necessary due to the alarming activities of illegal loan apps, which were frequently involved in rights violations and unfair practices.
The introduction of this regulatory framework addressed the rampant issues caused by unregistered loan apps, providing a structured approach to digital lending in Nigeria. By May of this year, the number of registered loan apps had grown significantly to 284. This increase reflects the ongoing efforts to bring more lenders under regulatory oversight, thus promoting a safer lending environment.
Among these registered apps, 232 companies have been granted full approval, while 41 have partial approval, and 11 others are licensed by the Central Bank of Nigeria (CBN). This regulatory progress highlights the FCCPC's commitment to curbing unethical lending practices and protecting consumer rights in the digital lending sector.