Nigeria Shuts Down Illegal Online Banks, Loans Apps

The Nigerian government has carried out its threat of shutting down illegal online banks and loan apps operating in the country. This was through the combined efforts of The Federal Competition Consumer Protection Commission (FCCPC), in collaboration with the Independent Corrupt Practices and other Related Offences Commission (ICPC), National Information Technology Development Agency (NITDA), and the Nigerian Police Force, on Friday, raided some illegal financial institutions operating on Opebi Road, Ikeja, Lagos.

Chief Executive Officer, FCCPC, Babatunde Irukera
Chief Executive Officer, FCCPC, Babatunde Irukera

Among the financial institutions affected were, GoCash, Okash, EasyCredit, Kashkash, Speedy Choice, Easy Moni.

The raid, the FCCPC said, was in response to customers’ complaints of malpractices by the financial institutions. Speaking during the raid, the Chief Executive Officer, FCCPC, Babatunde Irukera, explained that customers had accused the financial institutions of violating their privacy in their debt recovery drive.

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He said the agency had begun investigations into the allegations since 2020.

He said, “This information started quite a while ago. Some time ago, when the country was on lockdown in 2020 due to the pandemic, we started seeing the rise in money lenders”

“Because there was a lockdown due to the pandemic, people needed a small easy loan which is understandable. But over a period of time, people started complaining about the malpractices of the lenders, so we started tracking it.”

“Towards the end of last year, we gathered quite a lot of information. We started working with some other key agencies and the FCCPC led the meeting where we all agreed there would be a joint effort to look into these businesses.”

According to Irukera, the interest rate charged by online financial institutions appears to violate the ethics of how lending is done.

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He further said, “The key two things that were subject of concern were what seems to be the naming and shaming violation of people’s privacy with respect to how these lenders recover their loans.”

Secondly, the interest rate seems to be a violation of the ethics on how lending is done. So, those were the two things that we set out to look for.”

“So, we started an investigation trying to determine the location of these firms. That has been a very difficult thing. We did that for several months and some of them have moved from one place to another and we have been visiting these places for months”

The FCCPC boss, however, said investigations had revealed that the loan firms were neither Nigerian companies nor registered in the country.

“We found out that most of these companies operate from the same place. We also found out that many of them are actually operated by the same person. They are not Nigerian companies, they don’t have an address in Nigeria and they are not registered in Nigeria with the Corporate Affairs Commission and they do not have any licence to do their business” 

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As a result, Irukare said the agency had written to global app companies asking them to suspend the operations of the online banks.

He said, “Essentially, what they have is an app, and so we started gathering more information about them. We engaged the public and the people who had been their victims. They gave us more information”

“As we got more information we had enough evidence to convince the court to issue a warrant for us to proceed with an investigation into a search and seizure. And sometime last month, a court issued a warrant and between then and now, we were preparing a sting operation which is what you are seeing here today. The reason for this is because we wanted to be sure we were hitting at the place where we could get many of them.”

He explained, “In addition to what you are seeing here today, the FCCPC has also issued multiple orders today. Two of them are going to vendors: Apple and Google stores where some of these apps are available. We have asked them to shut these companies’ apps down so that people will not be victimised anymore. Secondly, some of them (the orders) have gone to the bank, asking them to freeze the accounts used by these people.”

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“I must add though that not all money lenders are operating illegally and that is why it has been taking time for us to track these people.

It doesn’t also mean that the people we are proceeding against today are the only ones, no. We want to start with them. We also understand that they are between five and seven companies operating at the same location.”

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Nigeria Plans Clampdown On Illegal Lending Companies

A combined committee of the Federal Competition and Consumer Protection Commission (FCCPC), the Central Bank of Nigeria (CBN), and the Economic and Financial Crimes Commission (EFCC) will shortly shut down illegal money lending enterprises.

“The joint committee is meeting and agreeing on how to proceed but I can say that two of the entities of the joint committee will be going on the field and doing enforcement work now, very shortly. They will be closing down businesses and engaging App stores to shut down certain applications that are infringing and abusive. We are also going to be writing interim regulations and some basic information for all these money lenders to provide information so that people will know who they are. Some of them are just Apps that we do not even know who the promoters are. So we are going to provide certain frameworks for them to comply with before doing business,” an official statement from Mr Babatunde Irukera, the Chief Executive of Federal Competition and Consumer Protection Commission (FCCPC) read. 

The National Information Technology Development Agency (NITDA) and the National Human Rights Commission (NHRC) are also members of the group.

Mr Babatunde Irukera, the Chief Executive of Federal Competition and Consumer Protection Commission (FCCPC)
Mr Babatunde Irukera, the Chief Executive of Federal Competition and Consumer Protection Commission (FCCPC)

Nigeria Joins Kenya To Target Lending Firms

The latest move by the combined committee will not be its first. Recently, the much awaited 2021 Central Bank of Kenya (Amendment) Bill was signed into law in Kenya. 

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The new law now requires digital lenders to submit key documents when applying for CBK licensing, including a certificate of incorporation under the Companies Act, memorandum and articles of association, and a statement of compliance with the Consumer Protection Act’s provisions.

From the date the CBK publishes the necessary regulations, players in the digital lending market will have six months to apply for licence.

By signing the new law, the CBK has now been given the authority to proverbially bell the cat, with the banking sector regulator looking to bring order to an industry that has been accused of a variety of wrongdoings, including charging borrowers exorbitant interest rates and using crude and deceptive debt collection tactics.

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CBK Governor Patrick Njoroge has remained outspoken about the alleged wrongdoings, claiming that the digital lenders are a burden on not only Kenyans but also the economy.

The CBK will be able to set limitations for interest rates charged by digital lenders, and the reserve bank will have the authority to cancel licenses from players that violate the Data Protection or Consumer Protection Act’s criteria.

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Meanwhile, after being kicked out of the credit information sharing (CIS) system last year by CBK, licensed digital lenders will now be able to list creditors with Credit Reference Bureaus (CRBs), thanks to the new law.

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Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer