The Federal Competition & Consumer Protection Commission (FCCPC) has announced plans to roll out a new regulatory framework to address the rising debt rate to loan apps in 2024.
This was disclosed by the Chief Executive Officer of the commission, Mr. Babatunde Irukera, during a live program on TVC, stating that the high rate of unpaid debts is alarming, hence the need to address it.
He lauded the commission for its efforts in reducing abuse and harassment of several loan apps to defaulters but however noted that Nigerians taking loans from these platforms have continued to default. Irukera further added that the rising debt rate could lead to the collapse of the digital lenders that are also playing critical roles in the nation’s economy.
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In his words,
“One of the big issues that we’re seeing is that there’s now a significant level of loan default because people are not able to use these unethical and inappropriate loan recovery mechanisms and I’m insistent that you cannot say to me that the only language Nigerians understand is to abuse them. No, I disagree.
“We must necessarily do the work no matter how hard it is to find a more sensible way to recover loans because I also agree that if these digital money lenders are unable to recover their loans and drop out of the market, it’s a consumer protection problem because of those who need those types of short-term unsecured lending.
“So, we have to find the balance and so some of the regulations that will come out in 2024 will be abroader approach to responsible borrowing and responsible lending by individuals and corporates. I’m hopeful that the future of what we’re building is that even school landlords would be able to report to a centralized credit system about the conduct of tenants, students, and parents so that we can know each person’s level of fiscal responsibility or credit wordiness.
“So, we can address that if there is a central place where they could get information about individuals and their creditworthiness. If you don’t have access to credit you must build your responsibility and your creditworthiness and so there’s quite a lot still in the pipeline that we’ve been working on and we anticipate that 2024 will cause that to emerge.”
As Nigerian traditional institutions are often unwilling to offer loans, this has spurred a lot of people to resort to Digital Money Lenders (DMLs) for loans.
While the FCCPC plans to launch a new regulatory framework to address the rising rate of indebtedness to loan apps, it can be quite a Herculean task due to Nigeria’s dwindling economic situation.
The rising cost of living has forced many Nigerians to borrow from online lending platforms, as default rates continues to rise. Experts say that there has been a significant increase in the rate of lending caused by high inflation, poverty, unemployment, and other economic challenges facing the country.