In light of what has been called “sharp practices” and “abuses”, the Nigerian government is looking into ways to investigate several digital loan apps.
The House of Representatives has instructed its Committee on Banking and Currency, Financial Crimes, and Telecommunications to begin an investigation into the loan administration and business practices of fintech companies and online mobile loan apps in Nigeria.
The motion, “Need to Investigate Sharp Practices By Unregulated Online Fintech Lending Companies and Abuse of Mobile Digital Loan Apps in Nigeria,” was made before the plenary by Hon. Ahmed Satomi of Borno state. It was considered under matters of urgent public interest.
The motion said that these unregulated Nigerian fintech firms humiliate and threaten their clients who are late with loan payments. It also recognizes the need to look into the operations of firms like OKash, Opay, PayLater, PalmCredit, Branch, QuickCheck, Aella Credit, FairMoney, KiaKia, EasyCredit, NewCredit, Umba, Carbon, and FirstNell.
Other names for the probe include; SoftNaira, SharpCash, Newcredit, Cash Mall, NairaLand, Naira9ja, New Credit Loan App, SharpCredit, MoneyHub, 9jaCash, Henloan, Get Loan, Plenty Cash, Fundy, iMoneyPlus, CashCredit, LifeLine, Lumos Loan, NairaPlus, Care Finance, Cashbean, CashMe, LoanMe, LifePurse.
Presenting the motion, Satomi noted the proliferation of online loan apps across Nigeria by “some fraudulent and unscrupulous profiteers affecting many low income Nigerians, who are coerced to borrow and get trapped in the web of sham loan apps hosted on Google Play Store by individuals and companies to swindle the low-income earners”.
He claimed that the COVID-19 pandemic had a negative impact on many economies, including Nigeria’s, as a result of the loss of jobs and reduced incomes brought on by lockdowns, travel bans, and bans on face-to-face interactions. He also claimed that some dishonest, unregulated financial service providers had infiltrated the industry as a result.
He continued: “These predatory lending apps are disguised as platforms where unsuspecting members of the public are promised access quick loans with no collateral except 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 lawmaker expressed worry that inquiries into the registration status of loan apps in Nigeria with the Corporate Affairs Commission (CAC) revealed that the founding directors of such apps or companies were foreign nationals operating illegally in the nation without the necessary license to handle the volume of financial transactions.
“The operations of Kash Kash with a hosted operating account under the name Super Car Universal Limited with a certain commercial bank in Nigeria where Kash Kash, carries out activities of the loan app, such as the exorbitant interest rates they collected from customers and defamatory messages sent to contacts of their customers when they missed their repayment date.
“Such account holder did not have the required license to operate as a money lender, which led the Commercial Bank to close the first account, but such operations were moved to another account named Speedy Choice which is still operational and managed by the same people who managed the previous account.
“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).
Upon adopting the motion, the House gave the committee one month to conclude the assignment and report to the House for further legislative action.
