Nigeria Tightens Digital Lending Rules with Heavy Penalties
TLDR
- Nigeria has introduced new regulations imposing fines of ₦50M for individuals and ₦100M, or 1% of turnover, for companies engaging in unethical digital lending practices
- The rules cover all lenders operating across state lines, including airtime credit services offered by telcos, but exempt microfinance banks that secure waivers
- Lenders must now avoid unsolicited marketing, disclose all fees, approve loans only for borrowers able to repay, and comply with data protection laws
Nigeria’s Federal Competition and Consumer Protection Commission (FCCPC) has introduced new regulations imposing fines of ₦50 million for individuals and ₦100 million, or 1% of turnover, for companies engaging in unethical digital lending practices.
The Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations, 2025, released in July, replace ad-hoc enforcement, such as app delistings, with a defined penalty structure. Directors of offending firms face sanctions of up to five years.
The rules cover all lenders operating across state lines, including airtime credit services offered by telcos, but exempt microfinance banks that secure waivers. Licence applications cost ₦100,000, with approval fees up to ₦1 million. Approvals expire after three years and must be renewed every 36 months, alongside a ₦500,000 annual levy.
Lenders must now avoid unsolicited marketing, disclose all fees, approve loans only for borrowers able to repay, and comply with data protection laws. The FCCPC will monitor interest rates to prevent exploitative charges. Existing operators have 90 days to comply.
Industry leaders welcomed the clarity but warned of potential cost impacts on lending services and consumer pricing.
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Key Takeaways
The FCCPC’s 2025 rules mark a shift in Nigeria’s $2.1 billion consumer lending sector from reactive enforcement to structured compliance, aligning with similar moves in markets like Kenya. By setting explicit penalties and approval requirements, the commission aims to address borrower harassment, opaque fees, and predatory rates that have drawn public and legislative criticism. The framework positions digital lending as part of the formal financial system, not a fringe activity. This could help restore trust in a sector plagued by high default rates and aggressive collection tactics. However, higher compliance costs may squeeze smaller operators and could lead to higher borrowing costs for consumers. With over 460 digital lenders already in operation, the sector’s next phase will depend on how players adapt to balancing profitability, customer protection, and regulatory scrutiny. The FCCPC’s active monitoring of interest rates and advertising could also influence how products are marketed and priced in the years ahead.
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