Nigeria’s fast-growing digital lending industry is facing fresh scrutiny as the Federal Competition and Consumer Protection Commission (FCCPC) introduces new regulations to monitor and control interest rates charged by loan apps. The move comes amid persistent complaints from borrowers that lending platforms impose excessively high charges.
In its Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations, 2025, the FCCPC announced plans to keep watch over pricing practices.
“The Commission shall periodically monitor interest rates for services of consumer lending, and ensure rates are not exploitative and inimical to consumer interest. Such monitoring shall be made in compliance with provisions of Guidelines developed pursuant to Section 163 of the Act,” the FCCPC stated.
Industry Pushback
While the measure aims to protect consumers, digital lenders argue it could destabilize their operations. They insist that loan pricing should be driven by market realities such as the cost of funds and the high risk associated with unsecured lending.
The President of the Money Lenders Association (MLA), Mr. Gbemi Adelekan, cautioned that regulatory interference in pricing could distort the market.
“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,” he said.
Borrowers’ Experiences
For years, borrowers have raised concerns about excessive charges. Although many continue to patronize loan apps out of necessity, some default on repayments, citing unaffordable rates.
In one reported case, a borrower seeking N2.5 million was required to repay N268,230 monthly for 24 months. This repayment plan totaled N6,437,520, meaning the borrower would pay N3,937,520 in interest—an effective annual rate of nearly 198%.
Explaining the rationale, Adelekan said:
- The high charges reflect both the cost of funds and the technology powering loan apps.
- Unlike banks, most digital lenders (except those licensed as microfinance institutions) cannot accept deposits and must borrow from commercial banks to fund operations.
- They serve largely low-income borrowers with unstable earnings, which increases default risks.
Backing Consumer Protection Rules
Despite their concerns about interest caps, lenders welcomed other parts of the FCCPC regulation—particularly restrictions on unethical debt recovery practices.
Adelekan endorsed the ban on loan apps accessing borrowers’ contacts, photos, and transaction histories, which some operators previously used to intimidate and shame customers.
“It’s a good step in the right direction for the ecosystem,” he said, noting that the measure would push more operators to rely on credit bureau checks.
He also praised rules requiring lenders to disclose loan conditions, including tenor, interest rates, and repayment structures.
Echoing this position, Adedeji Olowe, Founder of Lendsqr, observed that the new framework signals a more structured regulatory era.
“Whether you love it or hate it, digital lending isn’t a side hustle anymore. It’s part of the financial system, and it’s going to be treated that way,” he said.
A Stricter Regime Ahead
The new regulation builds on the Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending, 2022, which mandated all loan apps in Nigeria to register with the FCCPC. By May 2025, 425 digital lenders had been licensed.
However, despite earlier efforts, issues of harassment and borrower defamation persisted. Previously, offenders risked delisting from app stores. The updated rules now impose stiffer penalties.
According to the regulation:
“Any person or undertaking found to be in contravention of the provisions of these Regulations shall be liable to sanctions, which may include fines, suspension of operations, delisting of registration, or revocation of approval.”
Individuals in breach may be fined up to N50 million, while companies face penalties of N100 million or 1% of their previous year’s turnover, whichever is higher.
