Without feigning ignorance, pretence or exhibiting ego, it is practically impossible for an average Nigerian to live without borrowing. Aside joblessness, the salary of most of the working class is equally insignificant in the face of high cost of items in the market. Arguably, most of the working class spent their salary before pay day. Many even went ahead to borrow money to balance the backlog of debt .That is the orchestrated precarious and messy economy we have found ourselves. The salary has no more value and consequently, majority depend on loans to make the ends meet. It is pathetic, worrisome and disgusting. The take home cannot take workers home.
Stemming from the above, it has become an order for people to borrow money to meet their needs. From my little knowledge of survival, people borrow money from cooperative societies or banks.There are also some individuals who have turned lenders. They lend money and in return, receive both the principal and the interest which most often than not, are outrageous. In the absence of alternative, the “helpless needies” reluctantly accepted the humongous interest. Beggars may have no choice. And for how long are those in need would wait for the biblical manna !
A friend of mine once enlightened me about the HARAM nature of collecting loans that attract interest. I earnestly enjoyed his sermon but the feasibility of loan without interest is better left for a future discussion. Some loans are so urgent that waiting for procedure may spell doom. The issue of overdraft from banks is another nauseating factor. How many people have access to overdraft ?!
Based on these bereaucracy and in a bid to prevent insults from friends and relations, people now prefer the digital lenders. And, truly, it is working. Jocularly and logically, nobody wants to eat any meal prepared by his enemies for fear of poison but what do we do when the friends we trust had nothing to prepare and offer us! Except one wants to embark on hunger strike but that is perilous. Starvation distorts rational thinking. In a situation of economic malady, abnormality could be circumstantially normalized. One can eat pork in the absence of any other alternative. Ask the adherents of the religious sects that see pork as abomination and forbidden food.
Technology has made borrowing easier and digital lending has become an alternative option to bank loans. All you have got to do is to acquire a phone and you will be amazed about the number of loan adverts. Loaning has been categorized by the online lenders, depending on your financial status which would be verified through your bank details. Your worth and credibility is determined within a twinkle of an eye. Alert enters within minute and instantly, one is relieved; having secured the weapon to settle immediate needs.There is nothing like principle when your family is hungry. The situation is terribly bad to the extent that people have become chronic debtors in order to be responsible and responsive to their families. So, survival depends on loans. The good thing about loan is if it is invested in lucrative businesses but here we are, what business can one invest in while the stomach infrastructure is nil !
It is a metaphor that people collect loans with so much zeal but refund with reluctance while some default. Really, every business is a risk and this brings to fore, the issue of trust and fraud.
From the knowledge of logic, a prospective borrower who willingly avails the lenders with his correct data may not have any sinister motive to defraud. Requisite to loaning, the bio-data so presented are verified to ascertain its’veracity. It could be concluded therefore that the mindset to default is not predetermined. However, lending companies need to get back their money. Thus, the need to employ minimal force and certain tactics. Before I dwell into that, permit to dwell swiftly on internal sabotage.
From the explanation of a friend, the staff of most of these lenders are fraudsters. They carry out their nefarious acts because they have access to your account details. Once you applied for loans, your account details – name, bank, number, BVN , expiry date of your ATM and the three figure security number at the back of your ATM are no more safe. In this case, they can message one to pay your loan into certain unverified personal accounts; having privy to your loan amount and the time frame and data. The case becomes more worrisome with different staff attending to you at different times. That makes it impossible to identify any particular staff whom one must have paid into his account. This repayment into the personal accounts of the staff is at the detriment of the companies. The staff bombard one with different messages at midnight between 11pm and 3am; apparently, nocturnal. One common features of online lenders is the influx of scammers. In all honesty, it is difficult for someone who is not privy to your data to scam. But the case is different as soon as one opted for online loans. Therefore, the staff of these online companies who have an unhindered access to your details do scam and usually use young girls who have sweet and seductive voices.
However, in an attempt to enforce loan repayment, most of the lenders try to auto-debit the ATM linked to the profile while some resort to blackmailing, derogatory messages to the public and threat. This attitude calls to question, the privacy of the borrowers and the audacity of the lenders to bring the personality of the borrower into disrepute and public ridicule. The emanating questions at this juncture is the legality of reporting the defaulters to the world.
Does this amount to breach of customers’ privacy ? What is the position of regulatory agency? Does the term of agreement entered into during the process of online application of loan binding in a court of law ? Can the customers institute any legal action against the lending firms for broadcasting them to the World ? Does the social media have the right to provide a platform where customers details are beamed to the world by the lenders? Does the interest attached to the loan not too much? Is it right for the loan agency to deduct interest upfront ? Will a defaulter whose image has been battered, referred to thief and fraudster pay the loan again? Was he informed that the data he provided would be used to malign his integrity despite the confidentiality promised?
Through interaction with the public, I was able to deduce the fact that borrowers default owing to humongous interest. How do you expect a person who collected three thousand naira loan to pay five thousand naira back within seven days! The interest is almost the double of the principal. No commercial bank in Nigeria gets that. Meanwhile, people are compelled by circumstance to agree with the terms of agreement on abstract but with a reality of zero. I understand the Central Bank Of Nigeria, CBN has a regulation for the operation of these lenders but what mechanism did CBN put in place to stop the extortion in term of this humongous interest?
From my researches, any company that wishes to carry on the business of digital lending must obtain a Money Lending License in any of the 36 states of Nigeria and the Federal Capital Territory. A license obtained under the Money Lending Law of a state permits money lending activities only within that state. That shows that there are regulations. The Financial Services Regulation and Coordinating Committee (FSRCC) is a non-statutory body that was set up to provide top level forum through which the five statutory regulators meet quarterly with a view to preventing regulatory arbitrage. These regulatory institutions are – Central Bank of Nigeria (CBN)Securities and Exchange Commission (SEC)Nigerian Insurance Commission (NAICOM)National Pension Commission (PenCom)Nigerian Deposit Insurance Corporation (NDIC). The Investment and Securities Tribunal, Nigerian Stock Exchange, Debt Management Office, Chartered Institute of Bankers, Association of Issuing Houses and Chartered Institute of Stockbrokers also provide additional regulatory support and assist in enforcing market discipline.
Dwelling on market discipline, it is absolutely wrong for the lenders to subject the defaulter to pubic ridicule. I agree that recovery of loan is not easy especially where collateral and minimum documentation are absent. However, that is not a license to send messages that usually describe defaulters in a very strong negative terms and curses. That is a violation of right of privacy as enshrined under section 37 of 1999 constitution as well as Nigeria Data Protection Agency, NDPR(2019). Such policy of recovery and harassment is an abberation, defamation invasion and barbaric.
In my opinion, Government, through the various agencies need to act on this menace to stop the fragrant abuse. Similarly, the social media like face book, messenger and watzap need to be cautioned about providing platform for hate speech and derogatory messages.
Comrade Lekan Badmus is a columnist with Oduduwa News and Socio-Political Commentator.