The Federal Government has announced that it has prohibited all Nigerian mobile network operators, telecommunications service providers, and digital payment system providers from providing services to unregistered online money lenders.
This announcement was made by Mr. Babatunde Irukera, the Executive Vice Chairman/Chief Executive Officer of the Federal Competition and Consumer Protection Commission (FCCPC), in an official statement titled, “Further and Continuing Investigation of Rights Violation in Money Lending Industry and Release of Interim Regulatory Framework.”
The statement read that fintech companies such as Flutterwave, Opay, Paystack and Monify are to immediately cease and desist from providing payment or transaction services to lenders under investigation or not otherwise operating with applicable regulatory approvals.
Aside from Fintech organizations, the FCCPC also orders all telecom companies to desist from providing server/hosting or connectivity to lenders who are subjects of investigation or otherwise operating without regulatory approval.
“In addition to the enforcement action(s) and in furtherance of the desire to promote fair, transparent and mutually beneficial alternative lending opportunities apart from traditional lending to consumers, the inter-agency Joint Regulatory and Enforcement Task Force has developed and mutually adopted a Limited Interim Regulatory/ Registration Framework and Guidelines for Digital Lending, 2022 as the first and interim step to establishing a clear regulatory framework,” the statement further reads.
Irukera stated that enforcement of this regulatory order must begin immediately, and the commission will henceforth have subsequent companies seek permission before proceeding to lend digitally. He also said that it provides a limited moratorium period for existing businesses to comply in order to continue their lending activities.
In a bid to take further steps in ensuring the regulation is enforced, the commission states that it has asked Google and Apple to remove applications belonging to some lenders from their respective app stores.
Due to the unfavourable economic situation of the country as a result of the high cost of living, the popularity of digital money-lending platforms has increased over the last couple of years. Despite the numerous advantages it potentially possesses, most platforms have employed unprofessional tactics such as harassment and privacy violation in their operations. Concerned about this, the Federal Government began an investigation on the issue in 2020 and in March 2022, placed sanctions on common platforms, including GoCash, OKash, EasyCredit, Kashkash, Speedy Choice, Easy Moni, and Sokoloan, which are under investigation for violating consumer rights.
Nigeria boasts of having the highest number of fintech companies in Africa. A good percentage of these companies offer loans, but minimal scrutiny meant many operated without regulatory approval, something the FCCPC moves to change.