The Federal Competition and Consumer Protection Commission (FCCPC) has said the calls for the outright ban of loan apps by some Nigerians are practically impossible because of the way they operate.
The Chief Executive Officer of the Commission, Mr Babatunde Irukera, who stated this in an interview with Nairametrics, said aside from the fact that banning them totally would not solve the current challenges, the internet allows them to operate from anywhere in the world.
While noting that several other countries are facing similar challenges, Irukera said a ban would be a mere pronouncement.
He acknowledged that despite the recent registration exercise that saw over 180 digital lenders captured, some of the registered lenders have been discovered to be creating other apps to do business, which allows them to continue their unethical practices. He, however, any company found guilty of that will be permanently removed from the list of approved loan apps in the country.
Ban is not a solution
Highlighting reasons banning the loan apps may not work, Irukera said:
- “The advocacy and campaign for an outright ban while understandable is simplistic and presents no solution. For a business that can evade regulatory interfaces including operating entirely offshore, and possessing the versatility to evolve, rebrand, relaunch, rebirth, or relocate on the internet and needing no physical location, a ban is at best only a pronouncement, and may very well amount to nothing much more than that.
- “The very hard and continuous work of tracking and reigning illegality in with respect to this industry is the task we must all commit to, and it requires a lasting collaborative effort and vigilance by both consumers and regulators because it is impossible for regulators to have all the information to successfully track these businesses.”
Irukera added that eliminating the service and potential they provide for financial inclusion and expanding prosperity when done correctly, would be to exclude some of the most vulnerable members of society from commerce and meeting critical needs at crucial times.
- “The call for outright banning is ill-advised, and in most cases supported by former victims which is understandable, but insufficient for policymaking.
- Under an administration whose desire and focus is to expand prosperity and reach the least in society, reduce poverty, and empower the vulnerable, the mandate we as regulators must embrace is the hard work and road to accomplish that, not the supposedly easy approach of blanket bans and grandstanding,” he said.
Power of technology
While noting that the concern in Nigeria is similar to global challenges with respect to digital lending, Irukera described technology as an incredible tool and platform for expansion and shared prosperity that is “sadly also a potential tool for exploiting and impoverishing people.”
The FCCPC CEO said with the registration of loan apps, those who are willing to do business ethically have come within the Framework, while those determined to engage in illegal and abusive conduct find other means.
He, however, expressed concern that even those that are registered are beginning to leverage the Internet to circumvent the regulation.
- “We are discovering that some within the Framework are creating alternative channels outside of the Framework to do business. As we find those ones, we permanently, without opportunity for renewal or return remove them from the list allowed to operate.
- “The painstaking work of tracking businesses on the internet and holding them accountable is a global phenomenon and challenge that regulators and law enforcers are struggling with internationally.
- “Nigeria is not excluded. Indeed, many, even more, developed countries and platforms including Google are borrowing from some of the efforts that have so far worked in Nigeria,” he said.
Nairametrics recently reported that despite the efforts of the Federal Competition and Consumer Protection Commission (FCCPC) to sanitise digital lending space through registration, harassment and defamation of borrowers have continued.