- Nigeria’s Federal Competition and Consumer Protection Commission (FCCPC) has expressed frustration over its inability to stop illegitimate Digital Money Lenders (DMLs), also known as loan apps.
- The competition regulator says these loan apps use wallets on Payment Solution Service Providers (PSSPs) to execute their illegal transactions.
- Per the Executive Vice Chairman and Chief Executive Officer of the Commission, Babatunde Irukera, this is why the regulator”s efforts to stop their operations have proven abortive.
According to Irukera, the illegal loan apps move their transactions to PSSP platforms once their bank accounts are frozen, effectively escaping any further actions from the Commission.
The FCCPC revealed this a few days after CBN’s Nigeria Interbank Settlement System Plc (NIBSS) asked Nigerian banks to remove all non-deposit-taking financial institutions, including PSSPs, from their transfer lists.
Note: PSSPs are allowed to facilitate payments but not receive deposits. According to the CBN, only banks, mobile money operators, and other deposit-taking financial institutions are allowed to receive deposits.
Responding to an allegation that the Commission’s officials take bribes to allow illegal loan apps to operate, Irukera decried corruption before calling it false, explaining that the agency currently has no way to stop the operations of illegal DMLs.
On November 16, 2022, Google Play announced its Developer Program Policy updates to compel DMLs in Nigeria to follow FCCPC rules and provide information that proves to Google Play that they have complied.
However, it has done little to curb the unprecedented spread of illegal loan apps. FCCPC continues to delist loan apps.
Despite the FCCPC delisting up to 37 loan apps, more continue to spring up. There is no end in sight, as traditional financial institutions are unwilling to offer loans to most Nigerians.
With limited access to credit facilities coupled with Nigeria’s worsening economic situation, most Nigerians remain vulnerable to the dubious tactics of these predatory loan apps.