Experts proffer solutions to data breach by loan sharks

The Chief Executive Officer of the Consumertrics, Barrister Muyiwa Ayojimi, at the weekend brought together experts at a workshop that spoke on unethical practices of many loan sharks and the usual breach of financial consumers’ data privacies and why Nigerians must improve borrower lender relationship.

Consumertrics is the leading Go-To-Hub firm with the mission to protect consumers and helping organizations achieve consumer/customer satisfaction with high-impact solutions using research analytics, training and advocacy.

At the maiden workshop, the experts, who spoke on the theme “Responsible Borrowing and Lending: Balancing Access to Credit and Consumer Protection”, deplored the unethical practices of many loan sharks and the usual breach of financial consumers’ data privacies.

The Consumertrics’ CEO, Barrister Muyiwa vAyojimi, who called for tougher application of consumer protection laws, stated that  the banks’ stringent loan processes have erected barriers within the country’s huge credit market, thereby giving rise to the proliferation of illegal loan sharks.

“We are excited to have you all here to participate in the Consumer Advisory Series organized by Consumertrics. I would like to specially acknowledge the Consumertrics team for working who tirelessly from day one. Our partners for the important roles they have played. We couldn’t have pulled off this event without their hard work, dedication and support.

“This advisory series is the 1st of a quarterly series and it seeks to address burning issues that affects the well-being of the Nigeria consumers on one hand and providers of goods and services on the other hand in a manner that fosters  a healthy and mutually beneficial relationship”, Ayojimi stated.

He said several interested parties often tout Nigeria as a massive market, with limited available data, paint a less flattering picture of Nigeria’s total addressable market (TAM) in economic realities.

“Indeed the market is huge but, one way of growing a business is through loans. Credit increases the number of participants in the economy, and it fosters economic growth in any country

“According to a recent report by Euromonitor International, a London-based market research company, Nigeria’s consumer lending is expected to rise by 21.4 per cent to N1. 74 trillion in 2021 from N1. 42 trillion in 2020. The business of lending in Nigeria has evolved from the traditional system to a more flexible and digitally enabled system for a faster and more convenient process.

“This evolution has attracted extensive participation in the lending sector spurring the growth of the Nigeria Domestic Credit by 16.2 per cent YoY as at December 2021.

“Nigeria’s credit market has a high barrier to entry caused by Banks, with the rise in innovative fintech companies looking to play in the lending space, have an uphill task ahead that spans finance, technology, and data.

Earlier at a press conference, Ayojimi had said best practices needed to be developed and enshrined within the borrower lender space

He also said there was an urgent need by Central Bank of Nigeria (CBN) to emplace effective regulation and supervision of the loan sharks operating in the country and the Nigeria Data Privacy Bureau in collaboration with the NCC to protect the Privacy of Consumers.

He lauded the recent interventions by the Federal Competition and Consumer Protection Commission (FCCPC) to rein in the loan sharks over the deplorable act.

He further stated: “Payday lenders are stealing the limelight in Nigeria’s consumer credit space. In 2020, Carbon and Fairmoney, two of Nigeria’s biggest lending providers, disbursed N62.4 billion worth of loans. When you factor in other huge players like Branch or Aella credit, we could be hitting up N200 billion.

“Consumertrics informal surveys show that the salaried worker takes an average of N25,000 in loans 6 times a year. If 50 per cent of Nigeria’s 64.4 million workforce take a loan of N23,000 six times a year, that will amount to N4.4 trillion. There is a market and it must be governed responsibly to grow”.

In his speech, the CEO of the Federal Competition and Consumer Protection, (FCCPC),   Mr. Babatunde Irukera, who was represented by the deputy director, investigations and Enforcement at the Commission, Mr. Marvin Nadah, said that the practices of many digital lenders violate Section 17 of the FCCPC Act.

According to Irukera, some of the violations were: high interest loan rate; payable default fee, and unethical loan recovery methods, adding that the agency, the Central Bank of Nigeria (CBN) and other institutions are collaborating to ensure compliance to regulatory guidelines.

The Executive Vice Chairman (EVC) of the Nigerian Communications Commission (NCC), Professor Umar Dambatta, represented by Mr. Clem Omife, deputy director consumer affairs, said the CBN needed to take a cue from its Kenyan counterpart on how it is regulating the digital lenders effectively.

A data privacy professional, Ridwan Oloyede,  whovsaid some digital loan sharks used specific software that enable them monitor borrowers’ real-time phone activities, explained that permissions consumers grant to loan sharks on their mobile phones make them vulnerable to data privacy breach.

Oloyede urged state licensing digital lenders to carry out strict oversight, like federal counterparts.

Other panelists who spoke at the workshop included: Dr. Jamelaah Sharieff-Ayedun, managing director of CreditRegistry; Mr. Femi Daniel, Mastercard’s lead regional privacy counsel (for Eastern Europe, Middle East, and Africa);  Mr. Clem Baiye, a former National commissioner with NCC and Indepenedent director Transmission Company of Nigeria; Afolabi Solebo, the managing director of the Lagos state Consumer Protection Agency (LASCOPA); Mr. Olawale Eleto, Head Credit Analysis (for Business Banking), Union Bank of Nigeria Plc.

For a better society