It starts with a promise: “Instant cash in 5 minutes. No collateral. No paperwork. Just your phone.”
For many Nigerians, a trader in Aba trying to restock her shop, a mother in Benin paying hospital bills, or a graduate in Enugu searching for his first job, those words are irresistible. Digital lending apps have become lifelines in a country where traditional banks still see millions as “unbankable.”
But what starts as relief often spirals into torment. Borrowers take ₦10,000, repay ₦15,000 in three weeks, default once, and suddenly their phones won’t stop buzzing. Aggressive recovery agents flood their WhatsApp, bombard family contacts, and even send bulk SMS broadcasts, labelling them “fraudsters.” Some threaten jail, others shame people publicly.
Now, the Federal Competition and Consumer Protection Commission (FCCPC) is saying, enough. With the Digital Lending Regulations 2025, the Commission is introducing sanctions of up to ₦100 million (or 1% of turnover) for operators that flout the rules. For an industry long accused of harassment, privacy breaches, and predatory practices, this marks a turning point.
But the new regulations raise tough questions like: Will they protect borrowers without stifling credit access? Can loan apps survive if interest rates are capped? And will this reform actually advance financial inclusion, or scare lenders into retreat?
Let’s dig into what this really means for borrowers, lenders, and Nigeria’s digital economy.
Borrowers: Between Desperation and Exploitation
The complaints against loan apps are not theoretical; they are lived experiences.
- Rita, a mother of 3 in Awka, borrowed ₦20,000 after her child fell ill. When she defaulted for a week, her app sent bulk texts and incessantly called her until her battery died and she developed serious anxiety. They threatened to take her to court, report her to some agency and other threats and insults, calling her a “scammer.”
- Emeka, a graduate in Uyo, took three loans while job-hunting. He described recovery agents calling him “10 to 15 times a day,” sometimes threatening to report him to the police. He sank into depression.
- Ngozi, a teacher in Owerri, paid back her loan but was still harassed for “hidden charges that accrued due to not meeting the payment timeline.” She swore never to touch a digital lender again.
These stories are not rare; they’re common. For many Nigerians, the apps that claimed to “democratize credit” have instead institutionalised harassment.
The FCCPC’s new rules hit at the heart of these practices:
- Clear loan terms — no more hidden interest or sudden charges.
- Ethical recovery — agents must not harass, shame, or threaten borrowers.
- Data protection — contact lists and personal data can’t be weaponised.
For once, the balance of power seems to be shifting toward the consumer.
Lenders: The Risk Argument
Of course, the lenders see it differently.
According to Gbemi Adelekan, President of the Money Lenders Association (MLA):
“This is a difficult area because for us, the interest rate is determined by the credit risk, market risk, and cost of funds. Unless the authorities are planning to give us funds to be able to operate and bring more people into the ecosystem in terms of financial inclusion, I don’t know how this will work.”
Their case is simple: Nigeria is a high-risk lending environment.
- There is no robust credit scoring system covering the informal sector.
- Many borrowers vanish after collecting loans.
- The cost of funds for lenders themselves is steep, especially when borrowing from banks or investors.
Loan apps argue that without sky-high interest rates, their business model collapses. They say regulation should focus on bad behaviour, harassment and privacy abuse, not price control.
This tension is real. If rates are capped too low, some operators may shut down, leaving desperate Nigerians with no access to credit at all. That would be a setback for financial inclusion.
Regulators: Walking the Tightrope
For the FCCPC, the challenge is to strike a balance. On one hand, consumers need protection from an abusive system. On the other hand, lenders need room to survive in a tough market.
The Commission’s approach is layered:
- Punish violations with ₦100m fines.
- Disqualify directors of rogue companies for up to five years.
- Prohibit automatic lending and predatory advertising.
- Mandate joint registration for lender partnerships to prevent shell operators.
- Require local ownership in airtime and data lending services.
This isn’t a “ban” on loan apps. It’s a demand for transparency, responsibility, and accountability.
But enforcement will be key. Nigeria has never lacked good laws; the gap is often in implementation. Will the FCCPC truly have the manpower, technology, and political will to monitor hundreds of digital lenders, many of whom operate through shadowy online networks?
Global Examples
Nigeria isn’t alone in its battle against predatory digital lending.
- Kenya faced a flood of unlicensed loan apps that shamed borrowers with public exposure. In 2022, the Central Bank of Kenya introduced regulations to license all digital lenders and prohibit harassment. Many apps shut down, but trust in digital finance slowly improved.
- India experienced a wave of suicides linked to loan app harassment. Regulators there banned unauthorised recovery tactics, capped interest rates, and forced apps to disclose full terms upfront.
- The Philippines shut down dozens of apps for shaming borrowers on social media.
These cases show that tough regulation can curb abuse, but it must be balanced with measures that keep credit accessible. Nigeria’s challenge is to learn from these models while tailoring solutions to its unique context.
The Bigger Picture: Innovation vs. Exploitation
The digital lending boom in Nigeria was born from a gap: traditional banks excluded millions, and fintechs rushed in to fill it. In theory, this was financial inclusion at work, technology bringing opportunity to the underserved.
But inclusion without protection is exploitation. And exploitation erodes trust, which is the bedrock of finance.
If FCCPC enforces these rules effectively, we could see a healthier lending ecosystem:
- Responsible lenders who innovate without cutting ethical corners.
- Protected borrowers who can access credit without fear of humiliation.
- A stronger digital economy, where fintech thrives within guardrails.
If the rules fail, however, two risks loom:
- Lenders exit, leaving a credit vacuum.
- Unregulated black-market apps rise, operating outside Nigerian jurisdiction.
Either outcome would undermine the very financial inclusion Nigeria is chasing.
Conclusion: A Necessary Disruption
The FCCPC’s ₦100 million sanction rule is not perfect, but it is necessary. It sends a clear message: Nigeria will no longer tolerate digital loan sharks disguised as fintech innovators.
For borrowers, it signals dignity and relief. For lenders, it’s a call to evolve beyond profit-at-any-cost models. For regulators, it’s a test of credibility.
If executed well, this regulation could mark the beginning of a new era, one where technology truly empowers rather than exploits. If bungled, it risks creating new problems while solving old ones.
Either way, Nigeria’s digital lending sector will never be the same again.
Read Also: Nigerias-fccpc-cracks-down-on-loan-apps-with-new-₦100m-sanctions/
