The number of digital lenders operating legally in Nigeria has surged to 425 as of May 2025, a significant increase from the 320 recorded in the previous year. This growth, however, is stirring concerns over rising borrower indebtedness and the laxity of credit checks in the industry.
Data from the Federal Competition and Consumer Protection Commission (FCCPC) reveals that 362 of the approved lenders have secured full operational approval, while 42 are operating with conditional licences. An additional 21 have been licensed by the Central Bank of Nigeria (CBN).
Industry insiders attribute the growth to a low barrier to entry and the increasing participation of retired bankers. According to Gbemi Adelekan, Chairman of the Money Lenders Association, digital lending offers a more accessible alternative to microfinance operations, which are burdened with stricter regulations and higher capital requirements.
“Many retired bankers are joining the digital lending space. It’s less costly and faster to launch,” Adelekan said. However, he warned that many operators, eager to gain market share, are bypassing critical credit checks. “New players push out loans indiscriminately—offering N5,000 to first-time applicants who then collect from multiple lenders and default.”
The poor state of Nigeria’s credit reporting infrastructure is exacerbating the problem. While bureaus provide credit reports, the updates are not in real time. “It can take up to 30 days for loan defaults to reflect,” Adelekan explained. “This delay allows some individuals to exploit multiple platforms. Just last week, someone owing 35 lenders applied for yet another loan.”
Uzoma Nwagba, CEO of the Nigeria Consumer Credit Corporation (CREDICORP), agrees the system needs urgent reform. He noted that credit reports don’t reach all registries and that data fragmentation creates exploitable loopholes.
“There’s a credit reporting law, but it needs strengthening,” Nwagba said. He revealed that CREDICORP and the CBN are collaborating on a proposal for legislative reform. Measures under consideration include linking credit behavior to government services such as passport renewals and tenancy applications.
Despite the growing number of regulated lenders, many unregistered apps continue to operate, preying on desperate borrowers. The FCCPC has placed 88 loan apps on its watchlist for abusive practices, including defamation and harassment. Another 47 apps have been delisted from the Google Play Store.
Dr. Adamu Abdullahi, Executive Commissioner of Operations at the FCCPC, said the Commission is working to ensure accountability through its Interim Regulation framework. “Before now, these apps were faceless. Now we can trace them to real companies and hold them responsible,” he said.
Abdullahi noted that while loan apps are critical to expanding credit access in Nigeria, consumer protection remains a top priority. The FCCPC continues to balance the benefits of digital lending with the need to curb unethical practices and reduce defaults.
