MOBILE LENDING IN NIGERIA
Between 2019 and 2024, Nigeria witnessed a rapid and largely unregulated expansion of digital lending platforms, popularly known as “loan apps”, which significantly transformed the country’s financial landscape and disrupted the traditional lending models. This surge was driven by the widespread availability of instant loans through mobile applications that required little to no documentation and were accessible without collateral.
However, the explosive growth and investment in this sector triggered widespread consumer abuse and predatory practices, largely due to the absence of a comprehensive regulatory framework. To address these issues and establish oversight, the Federal Competition and Consumer Protection Commission (“FCCPC”), pursuant to its powers under Section 163 of the Federal Competition & Consumer Protection Act 2018, enacted the Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations, 2025 (“Regulations”) to protect consumers and ensure a competitive and optimized market. The FCCPC also introduced the Digital, Electronic, Online, or Non-Traditional Consumer Lending Guidelines, 2025 (“Guidelines”) to contextualize and supplement the provisions of the Regulations.
Applicability of the Regulations:
Regulation 3(a) provides that the Regulations apply to all applicable transactions involving unsecured loans, including any form of lending to consumers either by way of cash, airtime, data, cashback, services, or barter in exchange for specific or verifiable monetary value. The Regulations apply regardless of how value, charges, or interest components are calculated or derived, provided the transaction occurs through digital, electronic, online or non-traditional means.
By virtue of Regulation 3(b), the Regulations also apply to persons or undertakings operating within a regulated industry where consumer lending, whether primary or ancillary, forms part of their business activities. Furthermore, Regulation 4 extends the applicability of the Regulations to all persons, parties, or undertakings doing business in Nigeria, whether physically, electronically, or through any other mode, to the extent that they carry on or participate in commercial activity within Nigeria and not only to primary lenders but also to every party, undertaking, or person involved in the transaction who receives a benefit or a portion of the associated revenue, including secondary lenders, vendors, service providers, or partners/collaborators.
Eligibility and Registration Requirements:
Part 3 of the Regulations establishes mandatory eligibility and registration procedures for all businesses and companies, involved in consumer lending. Under Regulation 7, all existing businesses must apply for and receive the FCCPC’s approval to continue offering such services within 90 days from the commencement of the Regulations. Regulation 8 prohibits any business currently involved in, or intending to engage in consumer lending, from entering into agreements, partnerships, or joint ventures for lending or other related services if those services are regulated by another authority, unless the business has a valid license or approval from that regulator.
Regulation 10 mandates that all partnerships providing consumer lending services must receive express approval from the FCCPC, while Regulation 12 specifies the documents that must be submitted to FCCPC for approval for registration approval for all businesses.
Powers of the FCCPC:
Under Regulations 13(3) and 16, FCCPC may deny an application for approval, terminate agreements, or revoke its approval, consequent upon which the consumer lending services must be immediately ceased.
Consumer Protection Measures:
To protect consumers from unfair practices, the Regulations impose several stringent consumer protection requirements:
- Disclosure and Transparency (Regulation 17): This provision requires lenders and service providers to ensure full transparency in their lending activities. Providers must clearly disclose all lending terms, such as interest rates, fees, and repayment conditions. Accurate and up-to-date information must be visibly displayed on websites and platforms. Consumers must receive the full contract terms before and immediately upon accessing the service to enable informed decision-making. All advertisements must be factual, clear, and non-misleading. For unsolicited marketing, providers must comply with data protection and communication laws and offer consumers an easy way to opt out.
- Fair Treatment and Prohibited Contract Terms (Regulation 18): This requires providers to treat consumers fairly, without discrimination or exploitation. Providers must strictly adhere to the agreed contract terms and may only vary interest rates, fees, or charges if such changes are explicitly allowed in the contract. The regulation prohibits unfair contract terms, including clauses that limit the provider’s liability, reduce consumer rights without consent, waive legal protections, allow contract termination or alteration without reasonable notice, or permit unilateral changes without specifying the conditions for such changes.
- Responsible Business Conduct (Regulation 19): This requires lenders and service providers to uphold responsible business practices. Credit services must be offered strictly on an opt-in basis, meaning consumers must actively request and consent before any credit is provided. Providers are prohibited from compelling consumers to use lending services or imposing them through persistent or overly targeted advertising. They may not charge fees for products or services the consumer did not request. Additionally, providers must conduct proper credit assessments and due diligence checks to ensure that consumers can sustainably repay any credit granted.
- Data Protection and Security (Regulations 20-21): These provisions impose strict data protection and security obligations on providers. They must comply with the Nigeria Data Protection Act 2023 and relevant sector-specific privacy and cybersecurity regulations. Providers are required to implement strong security measures to protect consumer data and ensure the integrity of transactions. Consumers also have the right to request and receive their service usage history or statements within 24 hours of making such a request.
- Complaints Handling and Redress (Regulation 22): This requires providers to maintain a fair, transparent, responsive, and independent complaints-handling process. Consumer complaints must be resolved within 24 hours of receipt. If resolution within that period is not feasible, the provider must communicate a timeline, which in all cases must not exceed 48 hours from when the complaint was received.
Obligations on Undertakings:
To enforce the Regulations, lenders are under a statutory obligation to submit biannual reports to the FCCPC detailing transactions, fees collected, and complaint resolutions. The Regulations impose penalties for non-compliance with any of its provisions ranging from fines, suspension of operations, delisting of registration, revocation of approvals, or disqualification of directors.
Compliance Deadline:
The FCCPC has set 5 January 2026 as the compliance deadline for all existing mobile/digital lending platforms. New businesses must comply immediately upon commencement of operations.
Conclusion:
The Regulations provide a comprehensive framework for regulating mobile lending in Nigeria and aim to cushion the negative impacts of the rapid expansion of digital loan platforms. By establishing clear rules on licensing, registration, partnerships, consumer protection, and data security, the FCCPC is able to protect consumers, ensure transparency, and monitor compliance effectively. This safeguards borrowers from predatory practices and promote a fair and accountable digital lending system.
This article is intended to provide a general overview of the regulatory framework and does not constitute legal advice.
For enquiries or assistance on any of the matters discussed above, please contact us at lawyers@royalheritagelaw.com
— Article authored by Chidinma Okolo (Associate) and edited by Ruth Olaoyenikan (Senior Associate).