Follow Us on Google
By Henry Uche
The Managing Director of PalmPay Nigeria, Chika Nwosu, has advised Nigerians to thoroughly investigate potential money lenders before obtaining loans to curb rising cases of financial fraud.
Nwosu emphasized that some unscrupulous and invisible money lenders have capitalized on the laxity of many loan seekers in the country to exploit Nigerians.
He added that although people now enjoy broader access to credit than ever given due to the rise of digital lending platforms, it had given rise to fraudulent lenders.
“Securing credit was a privilege reserved for Nigeria’s well-established businesses, closely guarded by the traditional banking sector’s stringent protocols. However, recent technological innovations have enabled digital platforms to extend credit to individuals and small businesses with unprecedented ease.”
He explained that digital lenders offer a suite of appealing features that set them apart from their traditional counterparts: no collateral requirements, instant approvals, flexible repayment plans, and no restrictions on loan purpose. These innovations have democratised access to credit, making it available to a wider range of people and small businesses, effectively bridging the financial inclusion gap.
Nwosu, however, decried that not all digital lenders adhere to ethical practices in loan collection, he revealed that, “In March, the Nigeria Data Protection Commission launched an investigation into loan apps, citing over 400 privacy breaches. Some unscrupulous lenders have resorted to coercive tactics, such as shaming delinquent borrowers by contacting their friends and family or publishing their private information online.”
He stressed that this can pressure borrowers to take out new loans to pay off existing ones, often from predatory lenders, with many ending up trapped in a vicious cycle of debt.
“Consumers should thoroughly research lending platforms before applying for loans, ensuring they engage only with licensed entities to protect consumer data and ensure ethical behaviour. This not only safeguards the borrower but also provides a channel for recourse in case of disputes.
“Digital lenders, on their part, should offer more than just loans. They should prioritise transparency, educate consumers about responsible borrowing, and enhance financial literacy through targeted initiatives,” Nwosu urged.
