The Nigerian government is exploring avenues to probe some digital loan apps over what has been described as alleged sharp practices and abuses.
The House of Representatives has mandated its Committee on Banking and Currency, Financial Crimes and Telecommunications to investigate operations and loan administration of the fintech companies and online mobile digital loan apps in Nigeria.
According to the motion, these unregulated Nigerian fintech companies shame and threaten customers for late payment of loans; Cognizance of the need to investigate activities of these fintech companies, including OKash, Opay, PayLater, PalmCredit, Branch, QuickCheck, Aella Credit, FairMoney, KiaKia, EasyCredit, NewCredit, Umba, Carbon, and FirstNell.
Others include; SoftNaira, SharpCash, Newcredit, Cash Mall, NairaLand, Naira9ja, New Credit Loan App, Future Cash, SharpCredit, MoneyHub, 9jaCash, Henloan, Get Loan, Plenty Cash, Fundy, iMoneyPlus, CashCredit, LifeLine, Lumos Loan, NairaPlus, Care Finance, Cashbean, CashMe, LoanMe, LifePurse iLoanPro, LairaPlus, OxLoan and NoNowMoney, among others.
The lawmakers claim that these loan apps coerced low-income Nigerian earners to borrow and then get trapped in the web of shame.
He said the COVID-19 pandemic affected many economies, including Nigeria, as jobs were lost and incomes were affected due to the lockdowns, restrictions on movement and face-to-face interactions sped up the pace of digitalisation of financial services and the infiltration of some unscrupulous unregulated financial service operators.
He said: “These predatory lending apps are disguised as platforms where unsuspecting public members are promised quick access loans with no collateral except the provision of bank verification number (BVN).
“Such victims are expected to repay loans at astronomical interest rates within 3-7 days as against the 91 to 365 days claim on Google Play store, which has over 83.07% market share in Nigeria.
“Most of these loan apps or companies and individuals operate with no regulation by government, expired licenses and in some cases, no licensing.”
The lawmakers expressed concerns that the founding directors of these apps were foreign nationals who didn’t have licenses to operate the volume of financial transactions in the country.
“Many of such online loan apps operating in Nigeria disbursing loans to customers with no collateral and defaulters are always sent threatening messages and that Loan apps and other fintech products can be used for money-laundering and other forms of illicit financial flows (IFF).
The House gave the committee 4 weeks to conclude the assignment and report to the House for further legislative action.