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Local Authorities Are Waking Up To Nigeria’s Rogue Loan App Syndicate

By  |  August 22, 2022

Nigeria’s rogue digital lending racket, whose unregulated activities have become increasingly brazen and dangerous over the last few years, is the subject of an ongoing clampdown by local authorities.

Predatory loan apps have proliferated in Nigeria, especially in the last couple of years, taking advantage of a relatively lax regulatory environment to dispense exploitative credit and entrench abusive collection tactics. However, a recent show of resolve by the relevant local authorities is attempting to suppress the menace which is generally linked to entities that can be traced to China.

In the past week, the Federal Government, through the Nigeria Data Protection Bureau (NDPB), has disclosed that it is investigating Phillips Consulting and the United Bank for Africa (UBA) Plc for violating the Nigeria Data Protection Regulation.

This is according to a statement issued by the Bureau last week. The statement read in part, “Following complaints of violation of the Nigeria Data Protection Regulation against Philips Consulting and United Bank for Africa PLC, the Nigeria Data Protection Bureau National Commissioner, Dr Vincent Olatunji, has ordered a forensic investigation in line with Article 4 of the NDPR.

“The complaint against Phillips Consulting is in connection with the activities of online lending platforms who willfully breach the privacy of citizens whilst the investigation of UBA Plc pertains to allegations of infringement on the governing principles of data protection.”

Phillips Consulting, a well-known Lagos-based business and management consulting firm serving clients across the continent, was implicated as a silent partner in illicit lending operations following an explosive investigative expose published by Nigerian indie journalist, David Hundeyin, in May this year.

According to Hundeyin’s findings, Phillips Consulting Limited (PCL) provides “the local muscle for the loan shark operation, while the Chinese bosses provide the capital and the digital infrastructure.” It paints a picture that reflects one of the most revered corporate brands in Nigeria enabling a criminal international loan shark syndicate.

Some of the evidence also suggests that PCL handles HR functions for Soko Lending Company, one of the more notorious multi-brand loan app sharks operating in Nigeria which had been slapped with a NGN 10 M (~USD 23 K) fine for a raft of breaches by the National Information Technology Development Agency (NITDA) in August last year.

Soko Lending Company has since resurfaced through one of its many brands and PCL stands accused of playing an active part in all of its operations including setting up operations. taking payments from customers, and sending out harassing, defamatory messages.

In the statement issued by the NDBP, the Bureau further warned all data controllers and processors to refrain from all forms of data processing that were detrimental to citizens, the economy, and the security of Nigeria.

On a similar note, quick loan apps are also being scrutinised by Nigeria’s Federal Competition and Consumers Protection Commission (FCCPC). Last week, the consumer protection agency requested Google to remove four loan apps (Maxi Credit, Here4U, ChaCha, and SoftPay) from the Play Store for unethical practices.

The Commission revealed it began investigating the activity of quick-loan operators following several complaints bordering on data misuse that led to a massive raid that shut down six lenders based in Lagos earlier this year.

It is understood that the FCCPC has now directed all licensed payment companies and telecommunications/mobile operators in Nigeria providing supporting services to the listed apps to terminate such relationships.

Feature Image Credits: Moolah

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