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By Olakunle Olafioye
Hard pressed by the biting economy in the country, many Nigerians are turning to digital lenders in search of relief. But the desperation of the moment often blinds many to the fact that such relief frequently comes with its own thorns. In the end the reality pits lenders and borrowers against each other in a relentless battle of wits, with each side seeking to outsmart the other in pursuit of its interests.
This was precisely the situation faced by James (not his real name) and a digital lending platform. Having taken out loans on few occasions in the past and consistently met the repayment terms, James built a track record that qualified him for a larger facility.
However, more than a year after securing his last loan, the relationship between James and the digital lender has deteriorated into a fierce contest over the repayment of the debt. What began as a seemingly beneficial financial arrangement has since evolved into a protracted dispute, highlighting the growing tensions that often characterise the relationship between digital lenders and their customers.
James insisted that he had done nothing wrong by refusing to repay the loan, which he said was the fourth facility he had obtained from the digital lender.
“The first time I took a loan from the app, I was charged almost twice the interest rate that had been advertised. I paid it because I initially thought I had misunderstood the terms and conditions,” he recalled.
“The same thing happened the second time and again the third time. It was after that experience that I decided to pay them back in their own coin. Why advertise one interest rate only to increase it after luring borrowers into accepting the loan?” James queried.
Lucas, like James, found himself locked in a fierce, dog-eat-dog battle with a digital lending platform. His case stemmed from what he described as an attempt by the lender to exploit his financial vulnerability.
According to Lucas, the platform advertised a moderate and attractive interest rate to prospective borrowers, only to increase the rate after he applied for and accepted the loan facility.
Lucas said he obtained a loan of ₦50,000 in October 2025. Based on the platform’s advertised daily interest rate, he expected to pay less than ₦5,000 in interest after 30 days. However, Lucas claimed he was shocked to discover that the actual interest charged was significantly higher than what had been represented at the outset.
“It was extremely frustrating to realise that I had been misled into taking the loan from the platform when other options were available. This was the first loan facility I had ever taken in my life. To discover that vulnerable Nigerians like me can so easily become pawns and prey to unscrupulous lending platforms in a country with established regulatory institutions is deeply disappointing,” Lucas concluded.
He argued that the experience highlights the risks faced by financially distressed Nigerians who, in their search for a quick credit facility, may be exposed to misleading lending practices and hidden charges.
Unlike the period when many digital lending platforms reportedly relied on outright illegal and unethical tactics such as harassment, intimidation and name-calling to recover debts, James and Lucas said the lenders they dealt with adopted a more subtle but similar approach.
According to James, the platform initially began requesting repayment shortly after the loan became due through subtle reminders.
“The platform started by sending text messages and making calls to remind me about the outstanding loan. However, what began as gentle reminders gradually escalated into threats. At one point, I was told that I would be publicly labelled a wanted rapist or kidnapper if I failed to repay the loan. I informed the agent that such threats did not bother me.
“Later, I received another call during which the caller threatened to circulate my details to all my contacts, portraying me as a chronic debtor. I simply told the caller to proceed, as it would at least let those who refused to assist me when I sought help know that their failure to support me pushed me to seek a loan from the platform,” he said.
James added that the lender’s aggressive pursuit of repayment has since waned considerably. According to him, the platform has gradually shifted from threats to persuasion.
“The last time I received a call from the platform, the caller was literally pleading with me to repay the principal and forget about the interest,” he stated.
Complaints by Nigerians over alleged exploitative practices of digital lending platforms have intensified in recent years, with many questioning the effectiveness of the country’s financial regulators in addressing the growing concerns.
A common grievance among borrowers is the disparity between the interest rates advertised by loan apps and the rates eventually charged after loan disbursement. In addition, hidden fees that are not clearly disclosed upfront, the automatic rollover of loans when repayments are missed, and the accumulation of penalties and default charges often combine to deepen borrowers’ financial burdens.
For many debtors already grappling with economic hardship, these practices not only make repayment increasingly difficult, it often lead to frustration, distrust of lending platforms, and, in some cases, a decision to abandon their repayment obligations altogether.
In 2024, the Central Bank of Nigeria (CBN) blacklisted and banned several digital lending platforms for operating illegally, engaging in unethical debt recovery practices, and compromising consumers’ personal data.
This development may have emboldened some borrowers to take their own pound of flesh from loan apps, accusing them of exploiting the desperation of borrowers through exorbitant interest rates and questionable lending practices.
However, a financial analyst, Abiodun Raji, has warned that Nigerians who default on legitimate loans could face serious consequences.
According to Raji, while regulatory agencies may not directly sanction an individual for failing to repay a loan, loan default can trigger a number of repercussions from lenders and financial institutions.
“Failure to repay a loan will negatively affect your credit score, which is tracked through credit bureaus. This automatically reduces your chances of obtaining loans from banks and other major financial institutions in the future,” he said.
Raji further explained that the Global Standing Instruction (GSI) framework empowers participating financial institutions to recover overdue loan obligations directly from a borrower’s accounts held across different Nigerian banks.
“There is also what is known as the Global Standing Instruction (GSI). Through this mechanism, banks can recover outstanding loan repayments directly from any of your accounts maintained with other banks in Nigeria,” he added.
The analyst also noted that while the CBN and FCCPC impose stiff sanctions on lenders that employ unethical recovery tactics—such as public shaming, blackmail, threats, or unauthorised access to borrowers’ phone contacts—lenders are still entitled to pursue legitimate debt recovery measures, including the use of internal recovery agents and legal action through the courts.
In her reaction, a financial analyst, Mrs. Jane Iyitor, advised Nigerians to cultivate and maintain a strong credit reputation within their personal and professional circles. According to her, such a reputation can prove invaluable during periods of financial difficulty, as it increases the likelihood of receiving financial assistance from family members, friends, and associates.
She noted that individuals who consistently demonstrate financial responsibility are often able to access informal loans and support networks more easily than those with poor repayment records.
“The decision to seek loans from digital lending platforms should always be a last resort. There are people around us who may be willing to provide financial assistance in the form of informal loans. However, the challenge with many borrowers is their reluctance to repay what they owe. When people make it a habit to repay loans promptly, they build trust and establish a credible financial reputation among those around them. As a result, they may not need to resort to digital lending platforms, many of which are known for charging exorbitant interest rates and imposing harsh repayment conditions,” Iyitor advised.
