Lagos, Dec. 17, 2023: Mr Gbemi Adelekan, Chairman, Money Lenders Association, has emphasised the need for better regulatory protection for money lending operators and consumers to protect digital lenders from defaulters and strengthen the money lending ecosystem.
Adelekan, also, Chief Client Officer, Kwikpay Credit, a foremost digital money lending service, gave the advice on Saturday in Lagos.
He commended the tremendous efforts of the Federal Government through Federal Competition and Consumer Protection Council ( FCCPC) in making sure that consumers’ rights on loans were protected while illegal and unlicensed loan apps were deleted.
The chairman, however, called for appropriate regulations from government to address the various critical challenges of digital money lenders.
Adelekan, addressing the importance of money lenders, noted that about 50 per cent of Nigerians were still financially excluded by banks though they carry out millions of transactions in the economy.
According to him, this gap creates real opportunities for money lenders as their operations cater for low-income, middle-income and high-income persons alike with the ease of access to funding.
“In recent years, the popularity of digital money lending platforms have grown with lenders providing important services in Nigeria with personal and business loans services including extending loans without security to those that are unbanked and in the informal sector of the economy.
“The growing demand for this service in the country may also be due to the fact that money lenders loan services by design are inclusive and target some important sectors of the economy that have may been excluded from financial services.
“While the lending landscape becomes more competitive and more banks are providing online loans, the heart of the matter for most lenders is that we are lending money to people and businesses that will honour loan commitments and repay the loans,” he said.
Adelekan stated that in spite of technological improvement in credit analysis to enhance the quality of loans granted, the spate of increase in bad loans is worrisome.
This development, he explained, had made it imminent that government should step in to help save the industry.
The chairman said this could be achieved by introducing measures to ensure financial stability and enable healthy evolution due the huge potential and contribution to the real sector of the economy.
“Digital money lenders have consistently expanded risk acceptance criteria with the use of technology to accommodate more customers thereby improving access to credit in vital sectors of the economy.
“These activities come with critical challenges as the lack of conventional data like bank statements for financially excluded people means digital lenders are using other means of alternative data sources to overcome these challenges.
“It is obvious to digital lenders that even with all the usual measures in place to help mitigate some of the risk that comes with lending online, there are some situations that are completely out of our control,” he said.
Adelekan said the issue of identity theft and serial borrowers moving from one lender to another, using various tactics to circumvent the automated repayment and collection process, have become major challenges to lenders.
He observed that various platforms and groups on social media set up to give tips on ways to avoid repayment of loans to digital lenders operating in Nigeria.
“There have to be consequences for these acts in addition to being disqualified from getting loans in future.
“We need the intervention of government to improve the access to the courts including the small claims courts to secure judgements for the process of debt collections.
“Licensed digital lenders can also be given access to the Global Standing Instruction (GSI) introduced by Central Bank of Nigeria to reduce non-performing loans in the banking system and place consistent loan defaulters on a watch list.
“There is a need for a robust regulatory framework to address the various challenges in the industry,” he said.
Adelekan reiterated the commitment of members of the association to abide by every laid down ethical code of conduct in their operations.
