Key questions this article answers:
  1. Nigeria has a low credit bureau penetration compared to global averages. How does this affect the ability of digital lenders to provide consumer credit?
  2. How can the government support digital lenders operating in Nigeria to resolve the data challenge they face?

Digital lenders and Nigeria’s consumer protection watchdog—the Federal Competition and Consumer Protection Commission (FCCPC), are engaged in a delicate dance.

In an interview, the Commission’s Executive Secretary noted that the activities of digital lending companies came under the Commission’s spotlight in 2020. Some digital lenders flouted data privacy rules to access customers' contacts to “shame” them into paying up outstanding loan balances. This has largely been an attempt to ensure loans are recouped and defaults are reduced to a minimum.

To check their activities and reduce the incidence of unlawful practices, the FCCPC released the Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lenders 2022 (which we’ll call the “Guidelines”). The Guidelines, published in 2022, provide a framework for digital money lenders to register their mobile applications (apps) and declare compliance with Nigeria’s data privacy and consumer protection laws.

As a result, compliant digital lenders get approval to operate, while