Amidst hardship, Nigerians at mercy of online loan apps
For years, Nigerians have turned to online loan applications as a lifeline in times of financial distress. These platforms offer loans ranging from a modest N5,000 to as much as N3 million, providing crucial support to struggling businesses and helping alleviate hunger.
However, many users have found themselves in distressing situations due to exorbitant interest rates, harassment, and other forms of mistreatment by these lenders, writes DIRISU YAKUBU.
The plight of millions of Nigerians today echoes the bleak reality described by the philosopher Thomas Hobbes, who depicted a life that was “nasty, brutish, and short.” His insights from the 17th century remain shockingly relevant in contemporary Nigeria.
Since the return to democracy in 1999, which initially brought hope after decades of military rule, the situation for many Nigerians has not improved. Instead, democracy has come to symbolise little more than the routine holding of elections. The system has failed to empower the populace, leaving many citizens feeling disconnected from a government that is supposed to be “of the people, by the people, for the people.”
As successive administrations have struggled to address the needs of the populace, ordinary Nigerians face increasing hardships. While some fight to provide balanced meals for their families, many others are forced to live paycheck to paycheck, clinging to the hope that their fortunes will eventually improve.
No time is this pathetic situation more pronounced than in the past eight years when Muhammadu Buhari governed Nigeria like a man with little or no idea of what to do to alleviate the suffering of his people. Under Buhari, the naira, Nigeria’s currency, not only lost its value; citizens in their numbers found themselves begging to survive.
READ ALSO: FCCPC shuts down online money lending institutions over sharp practices in Lagos
Expectedly, Buhari’s management of the economy took its toll on the life of the nation, culminating in job losses, excruciating pains and attendant socio-economic disequilibrium.
As it were, many smart financial services were handy to offer solace to the suffering in society. Loan apps or digital money lenders, taking advantage of the Internet of Things, provided quick and soft loans to Nigerians, payable with little interest and within a reasonable period. Perhaps, these loan apps provided more assurances than the conventional money deposit banks due to the stringent conditions often demanded by the latter.
Investigations by The PUNCH reveal that many of these digital platforms deliver services to their customers in compliance with high ethical standards and the laws of the land.
Digital cash apps
Renmoney
Renmoney is a global financial technology company founded by New Zealand businessman, Stephen Jennings. It operates as a microfinance bank, offering digital banking solutions in Nigeria.
One of the most patronized quick-cash providing services in Nigeria, it provides loans ranging from N5,000 to N1,000,000 with repayment periods ranging from three months to one year at a monthly interest rate of between 2.12 per cent and 2.65 per cent.
It also grants business loans ranging from N50,000 to N6m.
One of the reasons Renmoney is the preferred choice of many Nigerians is the simplicity of the loan application process and quick disbursement of loans once basic required information is provided. The app offers flexible loan options with repayment terms that allow borrowers to choose repayment periods from 91 days to 12 months, backed by their ability to liquidate the loan.
With over 20,000 users relying on it for their financial needs, the app is rated 4.1 out of 5 on the Google Play Store. The app also offers savings and deposits with competitive rates, allowing users to save daily, weekly, or monthly and track their money at any time they want.
Renmoney requires users to link their bank accounts to ensure responsible lending. With this, it is possible to access the user’s six-month bank statement and financial history. Renmoney is one of the digital lending platforms regulated by the Central Bank of Nigeria and the Nigeria Deposit Insurance Corporation.
The app has over one million downloads from the Play Store.
Palmcredit
This loan app offers quick loans without collateral. It has over 10m downloads on Google Play Store alone as of July 2024 and is rated 4.2 out of 5 by over 187, 000 users across the country.
Owned by Transnet Financial Nigeria Ltd, Palmcredit offers instant loans from N10,000 to N300,000 with transparent lending practices and flexible repayment options. Monthly interest rates range from 4 per cent to 4.7 per cent, with an Annual Percentage Rate of 48 per cent to 56 per cent.
This loan app offers quick disbursement with repayment made possible through its app or by transfer from accounts of commercial banks. Repayment plans are flexible and can range from three months to one year. It also has the approval of the CBN to conduct business with Nigerians.
FairMoney
It is a digital banking services provider with a focus on lending. Unlike most cash apps, FaierMoney not only provides instant loans to its customers but also gives its users a bank account and a debit card for ease of transactions.
According to the company, FairMoney processes over 10,000 loans every day, with one loan disbursed every eight seconds.
This is reflected in the fintech app on the Play Store as it is one of the loan apps that have crossed 10 million downloads. For the 657,023 users who had reviewed the app as of January 2024, a 4.4 out of 5 was considered appropriate for their experience.
FairMoney is a digital bank focused on lending. The company provides instant loans of up to one million naira, as well as a bank account and a debit card. Established in 2017 by Laurin Hainy, Matthieu Gendreau, and Nicolas Berthozat, FairMoney has built a user-friendly app that simplifies the loan application process, attracting a user base of 1.3 million users.
Despite interest rates ranging from 10 per cent to 30 per cent monthly, the platform has earned a user rating of 4.4 out of 5 on the Google Play Store with over 600, 000 reviews.
FairMoney provides loans of up to N3m without hidden fees, collateral, or complicated processes. FairMoney deposits are insured by the NDIC and licensed by the CBN. The platform also provides robust customer support via email and phone.
Carbon
A CBN-licensed digital bank, Carbon provides a quick loan facility and other essential services common with conventional money deposit banks.
Given its flexibility, Carbon, founded in 2016 is patronized by many Nigerians for various loans including payday, personal and business loans.
It has been downloaded by over 161, 000 users as of July 2024 and is rated 4.3 out of 5 for service delivery and reliability.
Famous for quick loan approval and competitive interest rates, Carbon has gained a substantial user base of over 2 million and maintains a high user rating of 4.4 out of 5 on the Google Play Store.
It offers a diverse range of loan amounts, from N2,500 to N1m catering to varied financial needs. The loans come with flexible repayment schedules ranging from 61 days up to a year and monthly interest rates between 4.5 per cent and 30 per cent.
Importantly, the maximum annual APR is limited to 195 per cent annually.
Carbon provides reliable customer support and a secure banking environment, with deposits insured by the NDIC and regulated by the Central Bank of Nigeria.
Xcrosscash
Available both on Google Play Store and Apple Store, this loan app permits users to activate their credit limit.
Xcrosscash offers instant loans between N10,000 and N50,000 with a repayment plan of between three to six months.
The Xcrosscash app has been downloaded over 1 million times on the Google Play Store and, despite having one of the lowest loan ranges, it has one of the highest ratings by users, though it is the lowest among the top 10. The app is rated 4. 4 by 34,342 users as of July 2024.
WeCredit
WeCredit approves small and medium-scale loans to Nigerians ranging from N10,000 to N200,000. With a 4.4 rating by users, it is one of the most patronized apps by Nigerians for various emergency financial needs.
Newcredit
Newcredit gives instant, collateral-free loans ranging from N10,000 to N300,000 with repayment plans of three months to one year.
One unique feature of this money digital platform is its use of Artificial Intelligence to analyze prospective customers’ financial records, including the bank transaction short service messages on their phones and their creditworthiness from other lenders.
With over 5 million downloads as of July 2024, Newcredit is one of the most used loan apps by Nigerians in the past few years.
Branch
Branch, a leading loan app in Nigeria, boasts of a huge presence in many other countries. With over 10 million downloads, Branch has the highest number of reviews among all the loan apps in Nigeria and enjoys one of the highest ratings of 4.5 out of 5.
The app determines loan eligibility and personalised loan offers using users’ smartphone data.
The interest rates range from 17 per cent to 40 per cent and applicants can get access to loans from N2,000 to N1m within 12 hours, depending on their repayment history. Loans given by this app are repaid within four to 40 weeks.
This cash app offers personal loans with no collateral required and boasts a simple application process. Founded in 2015 by Matt Flannery and Daniel Jung, Branch provides personal loans ranging from N1,000 to N1,000,000, with tenures ranging from 62 days to one year and monthly interest rates ranging from 3 to 23 per cent.
Since it birthed on the Nigerian financial market, the app has been downloaded over 40 million times and it provides a flexible, user-friendly experience with no hidden fees.
Customers protection
With Nigerians patronizing these digital loan platforms, the Federal Government through the Federal Competition and Consumer Protection Commission enumerated several ethical stipulations in the Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending in 2022 to guide against harassment and possible defamation of borrowers.
For this sole reason, the regulator, FCCPC, has for the umpteenth time, confessed its inability to ban loan apps, amid calls from the public owing to scams perpetrated by some of the online lenders against genuine borrowers in the past. But this is not the only hurdle faced by the FCCPC as the rate of patronage of the loan apps by Nigerians makes outright banning of same, if not impossible.
For about a decade now, millions of Nigerians have been grappling with persistent economic challenges, most of which have been blamed by financial experts on the administration of Muhammadu Buhari.
Recall that for the better part of his first year in office, the Daura-born retired army general failed to constitute his cabinet, despite persistent calls by well-meaning Nigerians for Ministers to be named and assigned portfolios.
When he (Buhari) eventually did; a combination of a fall in the price of crude oil at the international market and failure to reshuffle/sack non-performing cabinet members, left the economy prone to existential dangers.
The incumbent administration of President Bola Tinubu may have recorded some commendable achievements in the little over a year in office but the challenges which made Buhari-led government anti-people are still very much alive today.
The limited access to farmlands in the North-West, North-East and some parts of North-Central owing to violent campaigns by the Boko Haram sect, has culminated in a hike in the cost of food items and other agro-allied products. This, coupled with the withdrawal of fuel subsidy, has culminated in a human-induced hunger, which makes borrowing a second skin to most Nigerian workers today.
The rate of patronage of these digital lending platforms by Nigerians is a pointer to the dangers that lay in wait should these loan apps be stopped from operating in the country.
As expected, some of these digital lenders have been accused of harassing their customers, particularly when they are unable to liquidate their loans at the maturity date.
This subsequently led to the setting up of the Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending and Guidelines 2022 by the FCCPC and the industry Joint Task Force comprising the Nigerian Communications Commission, the Central Bank of Nigeria and the Economic and Financial Crimes Commission, among others.
Tales of sorrow
Idris is a businessman who specializes in the buying and selling of foodstuff in Abuja. The business which he started in 2017 was on the upswing until “a family problem,” brought him down to his knees.
“I was doing very well, buying garri, plantains and cashew nuts from Edo State. I sometimes sell in Abuja or Kano. Things were rosy until something I prefer not to speak about happened to my family. I had to save my family name and I am glad I did. I sold everything I had to settle the matter and came down to square one,” Idris said.
“You know that we live in a funny society. Even those you helped yesterday will turn their backs on you when you are in trouble today. I had to start all over again but help was far in coming. That is how I was introduced to these money-lending apps. I tried it and it worked.”
Asked to share his good and not-good experiences, the light-skin businessman added, “I got N20,000 for a start and I was able to pay it before the due date. I think they were very impressed and I was told I could get a N50,000 instant loan. I applied and was given. Like the first one, I paid back before the end of 90 days.
“They then gave me the sum of N100,000 and that was when trouble started. I bought groundnuts with the money and supplied some supermarkets. Unlike in the past, they insisted on selling before payment. I think they had a meeting because virtually all of them said the same thing. This money was paid at different times and as a result, I was unable to meet up.”
So, what happened to Idris thereafter?
“I woke up to an early morning statement describing me as a criminal. They told me in no uncertain term that they would disgrace me if I failed to pay up within a week,” he stated.
Just when this reporter thought he had said his last, the 49-year-old man continued, “I would have lived with the shame while struggling to pay up my debt but they started reaching out to my phone contacts.
One Tuesday morning, about three people called me and one of them happened to be my secondary schoolmate. He was the one who lent me N50,000 which I added up to what I had to settle the loan.”
Idris’ story is not very different from Joshua Momoh, a mechanical engineer based in Nyanya, a suburb of Abuja, the nation’s capital. Momoh fixes Toyota, Honda and Nixan cars, with customer base spread across FCT, Kaduna, Niger and Kogi states.
Momoh shared his experience with The PUNCH.
He stated, “I have never used these digital lending platforms but I can’t forget what my customer Ifeanyi suffered in 2022. I got a message from an unregistered contact, advising me in my interest to prevail on Ifeanyi to pay up his debt. They then warned that if he failed to pay up, I could be arrested.
“I immediately called him (Ifeanyi) and we ran around to pay the N40,000. He came short of crying but I told him to man up.
“I was surprised because I didn’t sign any guarantor form for the loan. When I raised this point, I was told that while filling the online form, the applicant in addition to providing his/her BVN must allow the creditors access to his phone contacts.”
On her part, Rachael, an Abuja-based civil servant, narrated her ordeal to our correspondent after she loaned money from one of the apps to treat her ailing mother.
“I have an aged mother who took ill two years ago. I had no money because it happened the same week I renewed my rent. I got N150,000 from this loan app less than 24 hours after application. I couldn’t pay back because the ailment was getting worse.
“On the maturity date, they sent me my photograph with the word ‘Fraudster’ embossed across it. I was scared for my job because I knew I would have been thrown out if this image of mine went viral. But that is not the full story.”
Encouraged to tell the “full story,” Rachael, 37, added, “I couldn’t sleep when they threatened to publish my photograph. But my mother’s illness was getting worse and that was all that concerned me at the time.
“Luckily for me, a distant relative of mine sent me the sum of N100,000. I felt relieved because I could at least, settle some of the hospital bills.
“I went to an Automated Teller Machine to make a withdrawal only to discover that my creditors had taken the money while urging me to settle the balance within 48 hours. I almost passed out.”
Like the tales above, online opinion obtained by our correspondent share similar sentiments.
For instance, a user of one of the apps, Obene Justice, last year shared his frustration, “The experience we have here is really not worth talking about as they are very devastating. It is almost impossible to add money to the account and secondly, the response and support team is nothing to write about.
“First, I repaid my loan in full which took lots of e-mailing and sending of proofs before it reflected on the app after about a week. The same day the repayment finally reflected on the app, I was debited the same amount for the second time. Please refund my money.”
Sharing his experience, another user, Miracle Benson, wrote, “When you need money for an emergency, this is definitely not the app to go to. I have been trying to get a particular loan for two months and the deadline for what I needed the money for is past. They are still in the process of obtaining my bank statement for two months despite lots of emails sent.
“It is odd how you’ve done everything required and they don’t seem to deliver on their end,” adding that he is ‘Giving two stars (rating) because of the app platform and the prompt response of the customer service.”
Responding to Benson’s complaint, the bank wrote, “We’d love to help you. Please write to app@renmoney.com and our team will help resolve your issue quickly.”
Reviewing his thoughts on the services rendered by Palmcredit Instant loan app, Patience Udoh on July 31, 2024, said, “This is the first time having issues with a loan app. How won’t a financial app have a preview page? They have crazy interest rates. The app has one default. They will intentionally not make you be able to reduce the amount you want. If you reduce the money and proceed, you will end up seeing a huge amount in your account, to repay in a very short period.”
On her part, Esther Adewunmi described her experience with Palmcredit as a “Complete mistake.”
She wrote, “It was a total and complete mistake downloading this app or ever trying to apply for loan on this app. I tried to apply for a loan but the interest rate is too high and the repayment period is too short. I quickly ran from the page. When I wanted to close the app, a question popped up asking me why I wasn’t taking the loan and I clicked, ‘interest rate too high;’ only for me to wake up the next morning and see a credit alert from Palmcredit. I feel like cursing you people.’’
Responding, Newedge Finance Limited, which operates the app wrote, “Apologies. Palmcredit is a credible loan facility with many years of proven integrity.”
NDPC fines banks
In what may count as a bold move aimed at data protection, the Nigeria Data Protection Commission has fined four Deposit Money Banks and three companies the sum of N400m for alleged data breaches.
NDPC National Commissioner, Vincent Olatunji stated this while speaking of the implementation of the NDPC Act, since June 14 when the nation’s data protection law was enacted.
Olatunji also noted that in the past year, over 1000 financial institutions, schools, insurance companies, and consultancy firms have undergone investigations for violation of citizens’ data.
He said: “When we started, the level of compliance within the private sector was about 49 per cent while the public sector was 4 per cent. But today, private sector compliance is above 55, while the public sector has reached 15 per cent.
“The nation’s data ecosystem is now worth over N10bn and the commission considers it imperative to ensure that citizens’ data are safe, secure, and protected in line with global best standards and practices.”
According to him, the Commission is partnering with the Central Bank of Nigeria, the Small and Medium Enterprises Development Agency of Nigeria, and other regulatory agencies to ensure that all stakeholders under their supervision abide by the Data Protection Act.
As it were, these digital lending platforms have come to stay at least for now. The speed for which they process and grant applicants credit facilities partly informs their continued patronage, the tales of poor services notwithstanding. Until the Nigerian economy improves and job creation is given utmost priority, more of these online lenders are likely to spring up to attend to the huge financial demands of a growing population of unemployed and underemployed citizens.
Follow the Neptune Prime channel on WhatsApp: https://whatsapp.com/channel/0029Va74ZvU2v1IqKByXoX3d
Do you have breaking news, interview request, opinion, suggestion, or want your event covered? Email us at neptuneprime2233@gmail.com
