Loan Sharks: Data law will safeguard Nigerians
The proliferation of digital lending apps, also known as loan sharks, has raised serious concerns in Nigeria due to their abusive practices targeting vulnerable individuals. Consumers have expressed grievances over exploitative interest rates, questionable repayment enforcement, harassment, and privacy violations.
Recognizing the importance of data privacy, President Bola Tinubu took decisive action to protect Nigerians by signing the Nigeria Data Protection Bill into law in 2023. Data protection plays a crucial role in safeguarding critical information and ensuring data privacy to protect individuals’ rights and foster trust in the digital economy.
To oversee data privacy matters in the country, the Nigeria Data Protection Commission (NDPC) was established with the introduction of the Nigeria Data Protection Bill, replacing the previous NDPB. This comprehensive new law aims to protect Nigerians from the predatory practices of digital lending apps, which have raised concerns among consumers.
In collaboration with various government agencies, including the Federal Competition and Consumers Protection Commission (FCCPC), NITDA, NCC, CBN, ICPC, and EFCC, the NDPC has taken proactive action to address data breaches caused by loan sharks, aiming to safeguard the privacy and data protection rights of Nigerian citizens.
All digital lending apps are now required to obtain certification of their privacy policy from the NDPC as part of the registration criteria with the FCCPC to ensure accountability and responsibility among these platforms. Non-compliance with the regulations may result in penalties, as exemplified by the recent N50 million fine imposed on one of the lending apps, highlighting the significance of prioritizing user privacy and data protection in the lending sector.
To further promote compliance with data protection regulations, the NDPC is encouraging data controllers and processors to voluntarily register with the commission. Their target is to register at least 5,000 data controllers and processors by the end of the year, showcasing the government’s commitment to data protection and privacy.
The Nigeria Data Protection Bill, 2023, is a significant milestone in safeguarding the privacy and data protection rights of Nigerian citizens, according to Babatunde Irukera, the FCCPC’s Executive Vice Chairman/ Chief Executive Officer. By establishing the NDPC and implementing stringent regulations on digital lending apps, the government is actively protecting vulnerable individuals from exploitative loan practices, while also creating an environment conducive to attracting foreign investments through enhanced data protection measures to stimulate economic growth in the Data Protection Sector.
Furthermore, concerns have been raised by Okechukwu Unegbu, a former president of the Chattered Institute of Bankers of Nigeria (CIBN), about the proliferation of unethical digital lenders, commonly known as loan sharks, in the Nigerian financial system. To address this issue, Unegbu suggests empowering Microfinance Banks (MfBs) to play a more active role in lending to small businesses. He believes that MfBs are better suited to provide these services responsibly and in a regulated manner, effectively eliminating the menace of loan sharks.
