According to a report by the Federal Competition and Consumer Protection Commission (FCCPC), the number of approved loan apps in Nigeria surged to 284 in May 2024.
This represents an increase from the 266 companies approved in March of the same year.
According to the FCCPC’s updated list of authorized digital lenders, 232 companies have received full approval, while 41 have been granted conditional approval. Additionally, several companies are licensed by the CBN to operate as digital lenders in Nigeria.
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The FCCPC listed 11 other companies licensed by the CBN to operate loan apps, making a total of 284 approved digital lenders operating in the Nigerian market.
The surge in the number of loan apps in Nigeria reflects the growing credit appetite of Nigerians, amidst a weak Naira and an unfriendly economy. According to Piggyvest, four in ten Nigerians are in debt, and 26 percent owe loan apps.
The rising cost of living, driven by record-high headline inflation, which hit 33.69 percent in April, has reportedly weakened the purchasing power of many Nigerians.
Also, inflation which serves as a measure of consumer prices, has more than doubled over the last eight years, worsening the living conditions of cash-strapped consumers in Africa’s biggest economy. The President Tinubu administration’s reforms including the removal of petrol subsidy and naira devaluation, implemented in the second quarter of the year, according to reports pushed the inflation rate to the highest level in 18 years.
“The rise in consumer credits could be attributed to increased demand for credit facilities by economic agents,” the CBN said in a report. A breakdown of last year’s data revealed that personal loans recorded the highest share of 75.4 percent, while the share of retail loans stood at 24.6 percent.
Several Analysts stated that when inflation is rising but growth in income or economic activities is abysmal, one should expect this kind of trend where consumers would resort to credits to cover the shortfalls in a bid to meet their essential consumption.
Notably, the increase in the number of loan apps in the country highlights the FCCPC’s role in approving more digital lenders even as it struggles to bring the existing players under control.
The growth in the population of digital lenders coincides with the growing demand for personal loans. The CBN attributes the surge in consumer credit to the increasing popularity of loan apps and other fintech channels.
It is however worth noting that with the increase in the number of approved digital lenders, there has been a corresponding increase in the number of loan apps offering instant loans to Nigeria. This is because many of the approved digital lenders operate multiple loan apps.