Nigeria – The Federal Competition and Consumer Protection Commission (FCCPC) has dismissed calls for the complete ban of loan apps in the country, citing the practical impossibility of such a measure due to their operating mechanisms.
In an interview, Mr. Babatunde Irukera, the Chief Executive Officer of the Commission, emphasized that an outright ban would not effectively address the current challenges associated with these apps. He further explained that the internet enables them to operate from anywhere in the world, making it difficult to implement a ban.
Irukera highlighted that many other countries are grappling with similar challenges posed by loan apps and stated that a ban would be a mere pronouncement without tangible solutions. He acknowledged that despite the recent registration exercise, which successfully captured over 180 digital lenders, some registered lenders have been found to create new apps to continue their unethical practices. Any company found guilty of such actions will face permanent removal from the list of approved loan apps in the country.
“The advocacy and campaign for an outright ban, while understandable, is simplistic and presents no solution. 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.
“The very hard and continuous work of tracking and reigning illegality in respect to this industry is the task we must all commit to, and it requires a lasting collaborative effort and vigilance by both consumers and regulators because it is impossible for regulators to have all the information to successfully track these businesses.”
Irukera added that eliminating the service and potential they provide for financial inclusion and expanding prosperity when done correctly, would be to exclude some of the most vulnerable members of society from commerce and meeting critical needs at crucial times.
While noting that the concern in Nigeria is similar to global challenges with respect to digital lending, Irukera described technology as an incredible tool and platform for expansion and shared prosperity that is “sadly also a potential tool for exploiting and impoverishing people.”
The FCCPC CEO said with the registration of loan apps, those who are willing to do business ethically have come within the Framework, while those determined to engage in illegal and abusive conduct find other means.
He, however, expressed concern that even those that are registered are beginning to leverage the Internet to circumvent the regulation.
Nairametrics recently reported that despite the efforts of the Federal Competition and Consumer Protection Commission (FCCPC) to sanitise digital lending space through registration, harassment and defamation of borrowers have continued.
The FCCPC CEO recognized the need to address the concerns surrounding loan apps and their impact on consumers. However, he stressed that a comprehensive approach, which combines regulation, consumer education, and enforcement, is necessary to ensure responsible lending practices and protect consumers from potential exploitation.
While banning loan apps outright may not be a viable solution, the FCCPC remains committed to addressing the challenges associated with these apps and holding unethical lenders accountable for their actions.
