Digital lenders in Nigeria are raising concerns over fresh regulations introduced by the Federal Competition and Consumer Protection Commission (FCCPC) that seek to monitor the interest rates charged on loans. The development follows widespread complaints from Nigerians that loan apps impose excessively high charges on borrowers.
In its new Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations, 2025, the FCCPC announced that it would periodically review lending rates to ensure they are not exploitative. The Commission stressed that the monitoring would align with guidelines issued under Section 163 of its Act.
This clause has unsettled players in the digital lending space, who argue that interest rates cannot be arbitrarily regulated but should reflect the realities of their operations. They insist that factors such as cost of funds, credit risk and market risk determine the pricing of loans.
Industry representatives warn that capping or monitoring rates could destabilize the fragile digital lending market, which they describe as highly risky. They also argue that unless the government provides intervention funds, many lenders may struggle to stay afloat while trying to extend credit to underserved populations.
Borrowers’ frustrations with digital lenders are not new. Many Nigerians have long complained about the cost of loans, but despite this, they continue to rely on loan apps for quick cash. A case cited involved a customer who borrowed N2.5 million and was required to pay N268,230 monthly for 24 months, amounting to N6.4 million at the end of the tenor—an effective annual interest rate of nearly 200 percent.
While defending the high rates, lenders point out that most loan apps do not operate like banks and cannot mobilize deposits. They rely on borrowing from banks at high costs to fund their operations, in addition to investing in technology. They also highlight that their customers are often low-income earners without stable jobs, which significantly raises the risk of default.
Despite their objections to the interest rate monitoring, lenders welcomed other parts of the regulation. They applauded the FCCPC’s decision to ban apps from accessing customers’ contacts, photos and personal data, a practice often abused to harass borrowers. They also support the requirement for lenders to disclose loan terms, interest rates and repayment plans clearly.
Industry experts note that the new regulations mark a decisive shift from earlier frameworks. With 425 digital lenders already registered as of May 2025, the FCCPC is tightening oversight by introducing penalties for unethical practices. Offenders could face fines of up to N50 million for individuals or N100 million for companies, or 1 percent of their annual turnover, whichever is higher. Sanctions could also include suspension, delisting from app stores, or outright revocation of approval.
The FCCPC maintains that its goal is to sanitize the sector and protect consumers, while positioning digital lending as a formal part of Nigeria’s financial system rather than a loosely regulated side hustle.
