Tough penalties imposed on digital lending businesses in Nigeria
The Federal Competition and Consumer Protection Commission (FCCPC) has taken a significant step in regulating the digital lending sector in Nigeria with the introduction of the Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations, 2025. This marks the most aggressive intervention by the Nigerian government in digital lending yet.
Under these new regulations, digital lenders operating across Nigeria, including airtime credit services by telecom operators, are now subject to strict rules and penalties. The regulations aim to prevent predatory interest rates, misleading ads, and aggressive debt collection practices.
Key points from the regulations include:
- Penalties: Companies face fines up to ₦100 million or 1% of their annual turnover (whichever is higher), while individuals (including directors) may be fined ₦50 million. Directors involved in misconduct can be banned from the industry for up to five years.
- Licensing: Lenders must pay licensing fees, including ₦1 million covering up to two loan apps per lender. Licenses expire after three years and must be renewed with an annual levy of ₦500,000.
- Compliance Requirements: Lenders are required to disclose all fees transparently, avoid unsolicited marketing, approve loans only for borrowers who can repay, and comply with data protection laws. They must provide requested data to authorities within 48 hours.
- Scope: Only microfinance banks are exempt from the licensing requirement, but they must apply for a waiver. Each digital lending company is limited to owning a maximum of five apps in Nigeria.
These regulations mark a shift from ad hoc crackdowns to a more structured, predictable system in digital lending regulation. The new regulations impose hefty penalties on unethical behaviors such as harassing borrowers, using misleading advertising, hiding fees, or approving loans that borrowers cannot repay.
The new regulations also introduce a new credit system, linking borrowers' loans to their National Identification Numbers (NINs) in Nigeria. This move is expected to provide clarity and accountability in the rapidly growing digital lending sector, valued at around $2.1 billion.
The surge in digital lending in Nigeria, which saw personal loans reach ₦7.5 trillion in October 2024, has led to concerns about predatory practices and the need for increased oversight. The new regulations provide a clear signal that the Wild West days in digital lending are over in Nigeria, and a coordinated effort to bring structure, transparency, and accountability to the fast-growing consumer credit market.
[1] Federal Competition and Consumer Protection Commission (FCCPC) [2] Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations, 2025 [3] Nigerian Communications Commission (NCC) [4] Central Bank of Nigeria (CBN)
- Businesses operating in the digital lending sector in Nigeria, such as telecom operators offering airtime credit services, must now comply with strict finance-related regulations, including transparent fee disclosure, avoidance of unsolicited marketing, and adherence to data protection laws.
- The new regulations in Nigeria's digital lending sector, introduced by the Federal Competition and Consumer Protection Commission (FCCPC), impose hefty penalties on businesses engaging in unethical practices, like using misleading advertising or approving loans that borrowers cannot repay, which is a significant shift towards a more structured and accountable finance environment.
