Loan Apps are fast becoming a dangerous bend in a already travailed Nigerian domain. Duke Of Shomolu in this opinion piece task authorities on what must quickly be done to stop their slew of sharp practices.
Loan Apps: An Urgent Expose
Thankfully, the federal government has now come to the realisation of the danger in allowing operators of loan apps to run free all over the place.
Loan apps are a very recent occurrence in our consciousness. They emerged as a result of liberalisation of the space, deep penetration of technology, easy access to social media, and the growing grim economic situation in the country.
As a result, economically vulnerable people approach them for a quick fix and then inadvertently get pulled into a quaqmire of debts that has sometimes led to dire situations like suicide.
As earlier mentioned, the government has gotten round to engaging the operators, making it illegal to threaten, publicly harrase, and verbally assault debtors amongst others.
But, this doesn’t seem to deter the operators who remain determined to recover their funds using any means no matter how demeaning and humiliating
Recently, I got a voice note from someone who was owing one of these apps, N34, 000. They had called to warn her that if she didn’t offset the debt by a given time, they would throw her BVN to the public and shame her on social media.
This threw her into a tail spin, which resulted in her contemplating taking her life and basically running out of the home and switching off her phones.
My call to the operator was received by a very verbally abusive young man. He also threatened me and cursed me out. He said he was going to disgrace me and send out my obituary.
I laughed, asked for his account, paid, and that was that.
With names like Kash Kash, wiseloan, and goldignot, amongst others, these loan apps have turned out from a platform for temporary succour to a platform of evil.
They give out unsecure loans at very ridiculous rates and with very short tenors. What this means is that repayment is very tight. In fact, one can say that they are designed so you default, so they can further hit you with stiff penalties, which they will now use crude methods to recoup.
They have now become digital loan sharks who, instead of breaking your finger or knees in the case of a default, would cyber bully you to achieve the same results.
The addictive nature of the loan app community is such that the very vulnerable now jumps from one to the other, borrowing from Peter to pay Paul and when the person goes round the full circle, He or she starts afresh and when there is a default like a domino, everything falls flat.
Sadly, if you look critically into the sector, you will see our so-called respectable money deposit banks behind them. The margins are just too ‘sweet’ for them to ignore.
With their huge liquidity and risk averse nature to the vagaries of the real sector which is riddled with all sort of challenges, they divert these funds to these operators who are not under any kind of strict regulations. They stand clear as they watch them break all professional rules, including committing outright crimes for the filthy lucre they repatriate to their principals.
What Government And Regulating Agencies Must Do
The regulatory authorities must be a little bit more stringent in their attempts to curb the activities of these evil platforms. It must work with the banks to make soft loans readily available to the vulnerable using the same ease and technology deployed by these merchants.
Furthermore, it must register and run searches on owners of these platforms before giving them licences to operate and beyond that, ensure adequate supervision of their activities, especially their recovery strategy.
Granted and as a business, the regulatory authority must protect shareholder value, and that can be done without throwing up people’s obituary while they are alive.
Also, better credit qualification matrix can be put in place instead of giving funds to just anybody who has a phone, BVN number, and N100 data. This would shore up the quality of creditors and reduce default.
Furthermore, training and recruitment requirements should also be standardised with the minimum qualifications needed for entry.
Lastly, the government has to take this issue very seriously as it affects the vulnerable ones in the society.
– Duke Of Shomolu
