Loan Sharks: Lending app operators decry loss of business due to FG, Google regulations

Hundreds of loan app operators are in crisis following the Federal Government (FG)'s refusal to include them in the recent list of operators licensed and approved to operate in Nigeria.

A few weeks ago, the FG, through the Federal Competition and Consumer Protection Commission (FCCPC), announced that 173 digital lending applications had been approved to operate in the country.

Of the 173 listed loan apps, only 119 have total approvals, while the other 54 currently have conditional approvals.

Following the new development, the other loan apps considered unlicensed by the FCCPC are now considered illegal. They are not allowed to legitimately operate in Nigeria unless they meet the approval process in the future.

This, therefore, leaves the operators in a state of confusion as many of them have loan defaulters who are yet to pay back and may not bother repaying their loans due to the regulation of the lending sector.

Online lending platforms in Nigeria have existed for over a decade. However, their activities became more pronounced in the last six years when they appeared everywhere, online and in Android and iOS stores.

The rising cost of living in Nigeria has further pushed the demand for soft loans, which on the adverse, come with short repayment periods and high-interest rates.

Chuka Nnwadike, a Lagos-based banker, told Legit.ng that Nigeria's patronage of loan apps, rather than the traditional banks, is predicated on the swiftness by which the loans are granted, in most cases, without the demand for collateral.

He said: Data shows that most Nigerians are poor. Some people need loans as little as N5,000 to get by.

A bank will not give you N5,000 loan without requesting collateral and having you sign different documents. There's even no telling if the loan request can be granted swiftly. But with loan apps, loans are granted and received almost immediately.

Many Nigerians have come to depend on these loan apps, and there's often no clear-cut way for borrowers to discern the legitimate from the illegitimate. Most borrowers do not care if regulated or unregulated; they are more interested in a platform that can loan them money when needed.