JUST-IN: Loan App Virulence and Govt Silence in Nigeria

By Márìndọ̀tí Olúdàre

There is no gainsaying the obvious: hardship in Nigeria is real. With the rising cost of living, skyrocketing food prices, and no “helper” to send urgent ₦2,000, Nigerians are cornered into desperate measures just to fund their lives….CONTINUE FULL READING>>>>>

Poor penetration of legitimate consumer credit has left many with little choice but to fall into the hands of loan sharks operating under the guise of mobile apps. These outfits are not only predatory, usurious, and outright illegal, but their continued existence underscores the inefficiency of Nigerian regulators—namely the Federal Competition and Consumer Protection Commission (FCCPC), the Economic and Financial Crimes Commission (EFCC), the Federal Inland Revenue Service (FIRS), the Central Bank of Nigeria (CBN), and the Nigeria Police Force (NPF).

Investigations, including direct conversations with some of their staff, reveal that many of these companies are run by unscrupulous Chinese nationals who have found in Nigeria a fertile ground for digital financial exploitation. While the Inspector General of Police finds time to detain activists like Omoyele Sowore and Dele Farotimi on flimsy allegations of defamation, the police have failed to go after loan sharks whose entire business model rests on defamation and psychological terror.

The human cost of this negligence is grave. Nigerians have lost jobs, been disgraced, sunk into depression, and in some cases, committed suicide due to the unrelenting harassment by these loan apps. The pressure and public shame tactics employed constitute not just financial exploitation but mental torture.

The numbers tell their own horror story. If you borrowed ₦100,000 they take 16,400 as account management fee, 16400 as service fee, and 8,200 as payment commission, meaning only 59,000 gets deposited in your account. This is an effective weekly interest rate of 69.5%. However, since interest rates are calculated annually that makes an effective Annual Percentage Rate of 3600%. Having given out these usurious loans they threaten you with defamation stick then offer a poison carrot of borrow more money from them to pay back. If you had to borrow money to pay back under these terms and had to roll it over weekly: in 1 week you would have paid the 59,000 you borrowed, 41,000 in interest and you would still owe about ₦169,500; if this trend continues by the fourth week, you’ll owe roughly ₦486,900; by the eighth week, about ₦4.02 million; and by the twelfth week, around ₦33.16 million. Within three months, an initial ₦59,000 cash in-hand has exploded into tens of millions in debt. Were you to pay back with your own money, on a simple annualized basis, the weekly burden equates to well over thirty-six times the cash actually received—an absurdity no lawful market can sustain.

A Case Study from the Social Rehabilitation Gruppe (SRG) brings this to life. One member of our group needed ₦120,000. In just three months, over ₦12 million passed through her account in frantic repayments and rollovers. She ended up owing over ₦2 million to cooperatives and small lenders, over ₦1 million in family gifts, and still had a ₦4 million outstanding debt to loan apps. Her only salvation was to stop paying the loan apps altogether and focus on servicing legitimate cooperative loans with reasonable interest. This is the anatomy of financial entrapment.

The CBN’s official guidelines cap lending fees at no more than 2% of the loan amount, with penal interest capped at 1% per month. These loan apps charge more than 40% upfront in a single week, which translates to over 4,000% annually—a blatant violation. Furthermore:

• They are unlicensed entities, meaning they operate outside Nigerian law.

• They do not remit taxes to the FIRS.

• They employ debt chasers, paying them a meagre ₦70,000/month plus commission. These agents are incentivized to defame and harass borrowers because their pay depends on it.

Staff confessions reveal they hide under fictitious company names, fake ID cards, and shell structures to avoid detection by Nigerian authorities.

The silence of the FCCPC, EFCC, FIRS, CBN, and NPF is nothing short of dereliction of duty. This inaction not only emboldens loan sharks but also undermines President Tinubu’s plans for a credible consumer credit system, which requires trust between borrowers and lenders. If citizens lose faith in the credit system, no policy reform can succeed.

Since the government has shown little appetite to act, Nigerians must take collective action. Here’s how:

1. Reject Partial Disbursements: A loan that does not disburse the approved amount in full is already in breach of contract. Such lenders are not entitled to repayment.

2. Starve the Sharks: Stopping repayment is the only way to bankrupt these illegal businesses. They rely on the endless cycle of rollovers to survive.

3. De-stigmatize Defamation: If your relative is defamed by these apps, see it not as shame but as a badge of resistance. Their threats only have power if we collectively bow to them.

Loan apps in Nigeria are not financial service providers; they are digital predators. Their continued existence is a national shame and a glaring testament to regulatory incompetence. Until the FCCPC, EFCC, FIRS, CBN, and NPF wake up to their duties, Nigerians must resist, refuse repayment where contracts are breached, and unite to starve these companies to death.

The cancer of loan app virulence will only die when Nigerians collectively enforce its apoptosis—a natural death induced by the refusal to be exploited…..CONTINUE FULL READING>>>>>

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