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The Nigerian digital lending landscape is rapidly evolving. Given the rise in the number of startups and increasing interest in the business of digital lending, the ecosystem has been fraught with a number of unethical issues that expose consumers to harm. The Federal Competition and Consumer Protection Commission (also referred to as FCCPC or Commission), however, pursuant to its powers under the FCCP Act1], has introduced a significant regulatory instrument known as the Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations, 2025. This regulation, which took effect on the 25th of July, 2025, was made in furtherance of the Commission's obligation to protect consumers and ensure a competitive and optimized market.
It is noteworthy that this journey towards tightening oversight of the Nigerian digital lending market began in 20222, following years of minimal enforcement and fragmented oversight. This new regulation aims to provide standards, guidelines, and guidance to undertakings, their collaborators, affiliates, associates, or partners with respect to the provision of applicable Consumer Lending Services.
In this brief article, we aim to examine this new piece of legislation, its key provisions, impact on the business of lending, and any challenges and opportunities it presents.
Key provisions of the Digital Lending Regulations, 2025
i. An expanded scope of applicability
The Lending Regulations are applicable to any person or party undertaking the business of lending in Nigeria, whether by digital, electronic, online, or other non-traditional means. This lending transaction could take the form of unsecured loans, including lending by way of cash, airtime, data, cashback, services, or barter in exchange for specific or verifiable monetary value3. Furthermore, the regulations apply to persons or undertakings involved in any lending transaction, either as primary or secondary lender, vendor, service provider, or partner with the lender, as long as such person or undertaking derives benefit or a portion of the revenue generated from the transaction.4 This implies that the regulation now applies also to telecommunications companies, mobile money operators, agricultural technology platforms, real estate platforms, issuers of non-cash credit arrangements, and barter-based lending schemes.
Additionally, in view of the extraterritorial nature of digital lending transactions, the regulation also extends to operations conducted within a state or across multiple state jurisdictions in Nigeria.5. It also applies to lending operations hosted or conducted on any technology that extends beyond the borders of any single state in Nigeria6.
It is our understanding that this regulation, having extended its scope to sectors and industries associated with digital lending, has ensured greater accountability across these various sectors to the extent that they are involved in the business of lending.
ii. Mandatory approvals to provide consumer lending services
The Lending Regulations have provided a compulsory approval requirement for persons or undertakings who intend to provide consumer lending services in Nigeria. Hence, such persons must submit certain documents and pay the appropriate fees to obtain the Commission's prior approval before commencing such operations.7 The Commission is to review such applications within 30 days (which may be extended as it deems fit) and either grant or withhold its approval.8 Where approval is granted, it shall be valid for a period of 3 years (expiring on December 31 of the third year from the date of issuance), and renewal shall be done by March 31st of the subsequent year after expiration.9 It is also necessary to note that any approval that remains unrenewed shall be deemed to have expired.10
Moreover, existing digital lending operators are mandated under the regulations to ensure they secure the approval of the FCCPC within 90 days after the commencement of the regulations, in order to legally continue their operations11. These operators shall also ensure to enter into new consumer lending service agreements that comply with the provisions of this regulation, as all existing agreements prior to the commencement of the regulation are terminated.12
iii. Oversight on Partnerships
The Lending Regulations strictly require that any partnerships between two or more entities for the purpose of providing consumer lending services must be established by a Consumer Lending Services Agreement, which shall be submitted for approval by the Commission.13 Also, if the entities or undertakings seeking to enter into a partnership offer other regulated services, they must ensure to obtain the requisite license or permit from the regulator of such other service before the Consumer Lending Services Agreement can be entered into.14 Notably, after the Commission has given its approval to any partnership, subsequent modifications, amendments, assignments, subcontract, or novations of the Consumer Lending Services Agreement must receive the approval of the Commission.15
iv. Approval Timeline
To enhance efficiency and promote innovation, the regulations provide a timeline of thirty (30) days after the submission of an application to the Commission for the review, assessment, and issuance of its approval or disapproval.
v. Disclosure and Transparency Obligations
For the purpose of promoting transparency and enhancing disclosure practices in Consumer Lending Services, the Lending Regulations provide for mandatory disclosures for the Lender/Service provider, including:
– Disclosure of the terms of the Lending Service to the consumer in clear, simple, and legible English Language, and in a manner that is not misleading or deceptive;16
– Displaying of accurate and updated information regarding lending rates and associated charges for the use of the consumer lending service;17
– Notifying consumers on the specific terms and conditions for use of the consumer lending service;18
– Ensuring that websites, applications, platforms, or other information dissemination channels are functional and regularly updated;19
– Ensuring that the content of advertisements is true and unambiguous, and expressed in clear and simple language without being deceptive or misleading.20
vi. Mandatory Reporting Requirements
The lending Regulations provide for mandatory reporting obligations that lenders and service providers must comply with to ensure consumer protection and compliance. They include:
– Maintaining correct records of all consumer lending transactions, interactions, and complaints;21
– Submitting reports to the Commission every six (6) months, detailing the lending operations;22
– Filing of annual returns and reports of lending activities by 31st March of every year;23
vii. Strict penalties for non-compliance
The Lending Regulations provide severe consequences for any failure to comply with their provisions. Whereas for a natural person the penalty shall not exceed N50,000,000 (Fifty million naira)24, a corporate body found guilty of non-compliance shall pay a fine not exceeding N100,000,000 (One hundred million naira) or 1% of the company's turnover in the previous year, whichever is greater25. The regulations further provide that a director of defaulting companies may be held personally liable and, as such, may be fined and/or disqualified as a director for a maximum period of 5 years26.
The Lending Regulations mark a new chapter for consumer lending services in Nigeria. They strengthen consumer protection, transparency, and ethical practices, which are longstanding issues in the lending sector. We believe that forward-looking measures, such as data sharing with recognized credit bureaus, will improve transparency and ensure borrowers are rated fairly based on accurate information. While some requirements may pose operational challenges for lenders, we believe they are essential to protect consumers from widespread unfair practices in the system.
Footnotes
1. This is pursuant to the Commission's powers under Section 163 of the FCCPC Act, 2018
2. In 2022, the FCCPC issued the Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending, 2022, to regulate digital lending, especially at a time when so many digital lenders were resorting to crude and unprofessional means to recover debt, including harassment, defamation, cyberbullying, etc.
3. Regulation 3(a) of the Regulations
4. Regulation 3(b) of the Regulations
5. Regulation 4(b) of the Regulations
6. Regulation 4(c) of the Regulations
7. Regulation 12(1) of the Regulations
8. Regulation 14(4) of the Regulations
9. Regulation 16(3) of the Regulations
10. Regulation 16(4) of the Regulations
11. Regulation 7 of the Regulations
12. Regulation 29 of the Regulations
13. Regulation 10 of the Regulations
14. Regulation 8 of the Regulations
15. Regulation 12(4) of the Regulations
16. Regulation 17(a) of the Regulations
17. Regulation 17(b) of the Regulations
18. Regulation 17(c) of the Regulations
19. Regulation 17(d) of the Regulations
20. Regulation 17(e) of the Regulations
21. Regulation 25 (1)(a) of the Regulations
22. Regulation 25 (1)(b) of the Regulations
23. Regulation 25(2) of the Regulations
24. Regulation 27 (2)(a) of the Regulations
25. Regulation 27 (2)(b) of the Regulations
26. Regulation 27 (2)(c) of the Regulations
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
