Consumertrics, a leading advocacy firm on consumer rights and protection, has advocated for the need to improve borrower lender relationship particularly in the digital space.
Speaking at a press conference, the Chief Executive Officer of the Firm,Muyiwa Ayojimi said best practices needs to be developed and enshrined within the borrower lender space.
Ayojimi said there is an urgent need by Central Bank of Nigeria ( CBN ) to emplace effective regulation and supervision of the loan sharks operating in the country and the Nigeria Data Privacy Bureau in collaboration with the NCC to protect the Privacy of Consumers.
He lauded the recent interventions by the Federal Competition and Consumer Protection Commission (FCCPC) to rein in the loan sharks over the deplorable act.
According to him “ That more Nigerians can now access easy and quick credit through the digital lenders is commendable. Importantly, the growing number of loan sharks suggests a considerable credit market, which therefore calls for a structuring that centers around balancing credit access with consumer protection,” he said.
He added that the resort to public shaming debtors is usually traumatic for debtors and could lead to their taking life-threatening decisions.
He added that both borrowers and lenders have specific obligations to fulfil before and after consummating a loan facility, in line with globally acceptable guidelines on Financial Consumer Protection.
Ayojimi said the development is why Consumertrics is holding its maiden advisory series- Themed: Responsible Borrowing and Lending: Balancing Access to Credit and Consumer Protection in Nigeria Digital Economy, holds September 8 at The Zone Tech Park, Gbagada, in Lagos.
Also a keynote address would be given by Mr Babatunde Irukera, the Executive Vice Chairman/ CEO, FCCPC.
However there would be 3 panel sessions with sub-topics on Responsible Borrowing and Lending, Ensuring Trust and Transparency in Lending and the importance of protecting borrowers against data breach and fraud.
Other key speakers and panelists are Femi Daniel, Regional Privacy Counsel, (Eastern Europe, Middle East, and Africa) for Mastercard; Dr. Jamelaah Sharieff-Ayedun, MD, CreditRegistry; Mr. Afolabi Solebo, GM-LASCOPA, Mr. Wole Ajimisinmi, Executive Director Wema Bank; Aldolphus Aletor, MD Rigo Microfinance Bank, Mr. Wale Adekola, Director-Center for Consumer Concern amongst others.
Background
Digitalisation in form of technological innovation is having an ongoing transformative impact on societies and economies.
In relation to financial services, digitalisation has significantly affected all sectors ranging from payments to banking and saving to insurance to investing, with the emergence of many new products, services, distribution models by existing market players and new entrants such as tech companies both large and small.
One way of accessing capital is access to loan, Credit increases the number of participants in the economy, and it fosters economic growth in any country. With Nigeria’s consumer lending double digit rise year on year, the business of lending in Nigeria has evolved from the traditional system to a more flexible and digitally enabled system for a faster and more convenient process.
This evolution has attracted extensive participation in the lending sector spurring the growth of the Nigeria Domestic Credit by 16.2% YoY as at December 2021
Nigeria’s credit market has a high barrier to entry caused by Banks, with the rise in innovative fintech companies looking to play in the lending space, have an uphill task ahead that spans finance, technology, and data.
Lendsqr’s informal surveys show that the salaried worker takes an average of N23,000 in loans 6 times a year. If 50% of Nigeria’s 64.4 million workforce take a loan of N23,000 six times a year, that will amount to N4.4 trillion. Digital money lenders have expanded lending to the unbanked as well as underbanked consumers and businesses who can hardly access formal credit.
The discussion around digital lending as advocated by CONSUMERTRICS is on setting responsible/best practices by the digital lenders, as banks and mainstream financial services providers, may not serve them soon.
As seen lately, mainstream banks have also adopted this model of lending as a way of growing their loan book and penetrating the market, meaning this is a highly promising space and should be adequately regulated.
Responsible lending practice must be developed around; Unscrupulous collection methods, Insufficient information on terms and conditions.
Highly aggressive and misleading advertisement strategies. Digital lenders should be able to address these irresponsible practices by; Having a risk-based pricing model with reasonable rates prorated annually, Providing adequate repayment periods for the clients, Having the right products for the right customers based on their needs, Having pressure-free loans, Designing appropriate and responsible marketing strategies.
Digital credit customers in Nigeria markets are facing diverse and numerous financial consumer protection challenges and that is why CONSUMERTRICS is partnering with other Private sector think tanks on its Advocacy series to discuss the rights of the borrowers and the true cost of credit and proper debt collection practices of lenders.
About CONSUMERTRICS
Consumertrics is the leading Go-To-Hub firm with the mission to protect consumers and helping organisations achieve consumer satisfaction with high-impact solutions using research analytics, training and advocacy.
The firm’s core strength is in consumer governance and ratings, to evaluate the ethical behaviour of businesses against the rights of consumers across the market space in Africa.
