NaijaOnPoint Nigeria reports that Nigeria’s digital lending sector is facing uncertainty following the Federal Competition and Consumer Protection Commission (FCCPC)’s recent regulation aimed at monitoring interest rates charged by loan apps.
The move comes after repeated complaints from consumers that interest rates on many digital loans are excessively high. Under the newly released Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations, 2025, the FCCPC will now actively supervise interest rates to prevent exploitative practices.
“The Commission shall periodically monitor interest rates for services of consumer lending, and ensure rates are not exploitative and inimical to consumer interest. Such monitoring shall be made in compliance with provisions of Guidelines developed pursuant to Section 163 of the Act,” the regulation states.
Lenders Push Back
Digital lenders argue that interest rates should reflect the cost of funds and the risks associated with lending.
Speaking to Naijaonpoint, Gbemi Adelekan, President of the Money Lenders Association (MLA), warned that strict caps could disrupt the digital lending ecosystem.
“The interest rate is determined by credit risk, market risk, and the cost of funds. Unless authorities provide support to sustain operations and promote financial inclusion, this could be difficult to implement,” Adelekan said.
Borrowers’ Complaints
Nigerian borrowers have long criticized high-interest rates on digital loans. In some cases, borrowers repay nearly triple the principal. For example, a customer offered N2.5 million was required to repay N268,230 monthly over 24 months, totaling N6,437,520 almost 198% annual interest.
Adelekan explained that high rates reflect the cost of funds and technology. Most digital lenders, apart from those with microfinance bank licenses, do not accept deposits and must borrow from banks to fund their loans. Additionally, the majority of borrowers are low-income earners, increasing the default risk.
Support for Ethical Oversight
Despite concerns over interest rate controls, lenders welcomed FCCPC rules curbing unethical practices, such as unauthorized access to customers’ contacts, pictures, or transaction histories. Adelekan praised this aspect as a positive step for the sector and encouraged the use of credit bureaus for safer lending.
Adedeji Olowe, Founder of Lendsqr, added that the regulations signal a more formal approach to digital lending:
“Whether you love it or hate it, digital lending isn’t a side hustle anymore. It’s part of the financial system, and it’s going to be treated that way.”
Stronger Enforcement
The 2025 regulations build on the Limited Interim Regulatory/Registration Framework for Digital Lending, 2022, which mandated registration of all digital lenders. As of May 2025, 425 digital lenders had registered with FCCPC.
The new rules impose stricter penalties for misconduct. Individuals may face fines up to N50 million, while companies could be fined N100 million or 1% of last year’s turnover, whichever is higher. Sanctions can also include suspension of operations, delisting, or revocation of approvals.
“Any person or undertaking found in contravention of these Regulations shall be liable to sanctions, which may include fines, suspension of operations, delisting of registration, or revocation of approval,” the regulation notes.
With these measures, FCCPC is signaling its determination to sanitize Nigeria’s digital lending ecosystem, protecting consumers while formalizing the industry.