Obtaining a moneylender's license is a prerequisite to operating as a moneylender in Nigeria. A company seeking to function as a moneylender must apply to the relevant authority for a moneylending license.
This article will explore all you need to know to obtain a money lending license in order to successfully run a money lending business in Nigeria.
Who is a moneylender?
A moneylender is any registered company that engages in the business of lending money at a predetermined rate of interest.1
REGULATORY FRAMEWORK GOVERNING MONEY LENDING LICENCES IN NIGERIA
The key regulatory frameworks governing money lending licenses in Nigeria are:
Companies and Allied Matters Act (CAMA) 2020
The Companies and Allied Matters Act (CAMA) serves as the primary regulatory framework governing the establishment, operation, and management of businesses in Nigeria. To obtain a Money Lender's license, the company must be registered with the Corporate Affairs Commission (CAC) and a Certificate of Incorporation must be obtained, as it is a mandatory requirement to obtain a money lending license.2]
Central Bank of Nigeria Act 2007
The Central Bank of Nigeria (CBN) is the apex regulatory authority overseeing financial institutions in Nigeria. The CBN Act empowers the Central Bank to regulate money lending operations. This is often done by establishing interest rates and ensuring adherence to regulatory requirements.3
Federal Competition and Consumer Protection Act 2018
The Federal Competition and Consumer Protection Act establishes the Federal Competition and Consumer Protection Commission (FCCPC), which is the regulatory body tasked with the responsibility of protecting the rights of consumers of financial services.
The FCCPC oversees money lending activities to safeguard consumer interests as part of its statutory functions. This is often done through various guidelines that money lending companies must comply with before commencing business operations in Nigeria.
ALL YOU NEED TO KNOW TO OBTAIN A MONEY LENDER'S LICENSE IN NIGERIA
To obtain a moneylender's license in Nigeria, the following steps should be followed:
1) Application letter to the Chief Magistrate: The applicant must submit an application letter to the Chief Magistrate within the magisterial jurisdiction where the business will be carried out.4The application must be supported by the required documents, such as:
- Certified True Copy of the company's incorporation documents, i.e, Certificate of Incorporation of the Company & Memorandum and Articles of Association of the Company.
- Passport Photographs of directors of the company
- Tax clearance for the company and evidence that the company is a registered taxpayer.
- 3-year tax clearance for at least 2 directors of the company
- Police clearance for the applicant.
- Reference Letter from the applicant's bank.
- Proof of payment of the application fee
2) Issuance of relevant documents by the Chief Magistrate: Upon receipt of the application by the Chief Magistrate, the applicant will be issued a letter and Money Lenders Certificate Forms B and C.
3) Application to the Ministry of Home Affairs and Tourism: After issuance of the necessary documents by the Chief Magistrate, the applicant is to make a formal application to the Ministry of Home Affairs and Tourism, attaching relevant documents.
4) Payment of Official Fees: The applicant will also proceed to make payment of the official fee into the account of the Lagos State Government. Upon payment for the Application Form, the applicant shall be issued a receipt.
5) Visitation and Inspection: The final stage of the application is the visitation and physical inspection of the moneylender's office by the government officials. Upon satisfactory compliance with statutory requirements, the applicant will be issued with the Money Lenders License. By law, any moneylender license issued must expire by December 31 of the year of issue or within one year after issuance. Thus, a moneylender's license must be renewed annually.
CONCLUSION
The acquisition of a money lending licence is a precondition to operating a money lending business in Nigeria. Failure to obtain a money lending licence prior to engaging in the business of money lending is an offense punishable by fine or imprisonment in line with the applicable Money Lending Law in the State in which the business is to be carried out.
Footnotes
1. Berkeley LP, 'Money Lenders Licence in Nigeria' https://berkeleylp.com/insights/money-lenders-license-in-nigeria/#:~:text=Procedure%20For%20Obtaining%20a%20Money%20Lender's%20License&text=Certified%20True%20Copy%20of%20the,company%20is%20a%20registered%20taxpayer. Accessed February 4, 2025
2. Resolution Law Firm, 'Requirements for Money Lending License in Nigeria' https://www.linkedin.com/pulse/requirements-money-lending-license-nigeria-resolution-law-firm-xizyf/. Accessed February 4, 2025
3. supra
4. Berkeley LP, 'Money Lenders Licence in Nigeria' https://berkeleylp.com/insights/money-lenders-license-in-nigeria/#:~:text=Procedure%20For%20Obtaining%20a%20Money%20Lender's%20License&text=Certified%20True%20Copy%20of%20the,company%20is%20a%20registered%20taxpayer. Accessed February 4, 2025
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.
