Nigeria's loan apps smack of digital extortion

MARIAM Ogundairo’s experience highlights a common issue: predatory loan apps.

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She borrowed 30 000 naira (about R350) and was charged 21.6% interest, due in two weeks.

When she couldn't repay the loan, the app engaged in “contact shaming” by contacting her personal contacts, a tactic often used by lenders in Nigeria for debt recovery. This, along with threats and leaked images, is a standard and coercive business practice. A simple annualised cost of over 560% on a 21.6% biweekly charge demonstrates that this is not legitimate credit but a form of digital extortion.

A high-rate economy meets low-road finance

Nigeria faces a challenging economic landscape. Essential reforms like fuel-subsidy removal and exchange-rate adjustments have led to significant price increases and currency devaluation, severely impacting households. As of January 2025, headline inflation reached 24.48%, and the Central Bank's policy rate stands at 27.50%, making traditional bank lending prohibitively expensive even for established businesses. In this difficult climate, seemingly convenient apps offering “instant cash” at “low rates” appear to offer relief during tough times. However, these platforms often exploit the vulnerable, extracting their dignity and personal data.

Consumer credit outstanding reached 3.82 trillion naira by December 2024, a 21.27% increase from September, with personal loans disbursed in Q4 alone amounting to approximately 470 billion naira. This indicates that survival finance has become a mass market, not a niche. The social harm escalates as rapidly as balance sheets when lenders exploit this market through opaque pricing and weaponised data.

Enforcement theatre, not deterrence