Paschal Oparada
Nigeria’s apex bank, the Central Bank of Nigeria (CBN), is yet to react to reports of loan apps that seek to fleece Nigerians.
In January, a report by Hindenburg Research said Opera, the browser company is involved in what it calls predatory loan to Android users through its Okash app.
According to the report, Opera’s four apps that operate and offer lending products in Kenya, India and Nigeria, are involved in predatory services, thereby violating Google’s policy.
The report says rather than offer loans for the 91 days stipulated by Google, Opera’s loan apps offer shorter than expected – 15 to 21 days – instead of the 90 days stipulated.
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The report also accused the browser-owned company of Sherlock practices of lending above the approved CBN rate to as much as 365 per cent rate within two weeks and a violation of Google’s policy on lending apps in its stores.
The search giant said the decision was made “to protect people from deceptive and exploitative personal-loan terms.” Under the rules, borrowers must have at least 60 days to repay their loans, must clearly disclose interest rates and must offer “a representative example of the total cost of the loan,” according to Google’s personal loan app policy.
Opera’s lending apps lure prospective customers with appealing loan rates that appear to comply with Google’s policy, Hindenburg said. But after potential borrowers enter their personal information, the apps “either deny the borrower or grant a short-term loan with sky-high rates,” Hindenburg says. Annual percentage rates were 365 per cent with on-time repayment and 730 per cent if borrowers repay late on some of the apps, the report said.
The report outraged the public forcing Opera to temporarily pull the app from its main OPay app and reintroducing it as a Payday loan app.
Opera has since defended itself over the report saying: “We continue to provide more than 60 days repayment options for users, as required.” It said, “Hindenburg’s report contained “numerous errors, unsubstantiated statements, and misleading conclusions and interpretations regarding the business of and events relating to the company.”
Google is yet to react to the report and has allowed Okash and other personal loan apps owned by Opera to remain in its store.
Nigeria’s regulatory bodies, the CBN and Nigeria Communications Commission (NCC) are yet to react to the report, which many say, is a flagrant violation of the CBN rules.
Checks by this newspaper reveal that other personal loan apps are also in violation of both Google and CBN directives.
“Justus Ezebor, a financial analyst said that if the regulatory bodies were to conduct an investigation, they would find other loan apps which have also gone against both the CBN and NCC rules.
“I am not going to name names, but I know a lot of these apps, which not only go against the rules but also violate privacy rules. They harass debtors’ contacts and most times send creepy messages to them in order to embarrass them into paying,” Ezebor said.
According to him, “the CBN is not doing a good job of checking these fintech companies, which take advantage of the harsh economic situations to fleece people.”
Despite repeated assurances by the apps that user data are protected, experts believe some of the apps do not protect users’ data as they may be open to hacking by cybercriminals.
Before you get a loan, these apps ask you such critical questions as filling your debit card details, your bank verification number (BVN) and other details, which give them access to your bank records.
Experts say this is commoditizing user data and may result in being used as a medium of trade by some unscrupulous lenders, as was done by Facebook during the Cambridge Analytica saga of 2015 and 2016 in which over 87 million data of Facebook users were harvested for the purpose of advert targeting and vote-buying during the U.S. and Nigerian elections.
The commodification of user data is raising concerns around data privacy and ownership. The scrutiny is starting to result in partial clampdown measures. Kenya has passed new EU-inspired data protection laws and Nigeria merely ratified hers while Google announced recently that it would bar lending apps that promote personal loans, which require repayment in two months or less.
The Central Bank of Nigeria’s spokesperson, Isaac Okoroafor did not return calls to his cellphone or replied to messages sent to him seeking to know if the CBN is aware of these lending apps and what measures have been put in place to check abuse.
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But a CBN directive to fintech operators is that they must be duly licensed.
In 2018, the CBN introduced a bank category it calls payment service bank (PSB).
A PSB is a bank that is authorized to, among other things, accept a deposit, provide payment and remittances services and also issue digital wallets. According to the guidelines, a PSB should operate in rural areas.
Also, the Nigerian Communications Commission regulates fintech businesses where it involves the use of mobile phones.
