Nigeria’s digital lending sector is facing uncertainty following the Federal Competition and Consumer Protection Commission’s (FCCPC) new regulations aimed at capping interest rates on loan apps. The FCCPC’s Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations, 2025, announced plans to monitor rates to ensure they are not exploitative, responding to widespread complaints about high charges, according to a statement released to industry players.
The regulation has raised concerns among digital lenders, who argue that interest rates reflect the high risks and costs of their operations. Gbemi Adelekan, President of the Money Lenders Association (MLA), told Nairametrics that rates are determined by credit and market risks, as well as the cost of borrowing funds. “Without government funding to support financial inclusion, regulating interest rates could disrupt the digital lending market,” Adelekan warned, highlighting the sector’s reliance on bank loans, as most lenders, except those with microfinance licenses, do not accept deposits.
Public outcry over steep rates has been persistent. For example, one lender offered a N2.5 million loan requiring N268,230 monthly repayments over 24 months, totaling N6.44 million—nearly 198% annual interest. Adelekan explained that high rates stem from the elevated risk of lending to low-income borrowers with unstable income sources, coupled with the costs of technology and funding.
Despite these concerns, lenders support certain FCCPC measures, such as bans on accessing customers’ contact lists, photos, or transaction data, which have been misused for harassment. Adelekan praised these rules as a step toward ethical practices, noting they encourage the use of credit bureaus. The regulation also mandates clear disclosure of loan terms, including interest rates, tenors, and repayment schedules, which lenders endorse for transparency.
Adedeji Olowe, Founder of Lendsqr, emphasized the regulations’ significance, stating, “Digital lending is now a core part of Nigeria’s financial system, and these rules reflect a serious approach to oversight.” While the FCCPC’s push for consumer protection aims to curb exploitative practices, the industry warns that overly restrictive rate controls could hinder operations and limit access to credit for underserved populations, potentially stunting financial inclusion efforts.
