Microloan Platforms In Nigeria: How They’re Fast Becoming Curate’s Egg

Commercials banks in Nigeria serve many other purposes apart from accepting deposits and transfer of funds that they are mostly known for. One of these “many other purposes” includes the provision of loans to people to require them. Although this service is available to the public in commercial banks, in reality, they are not as readily available as they are made to seem. Overdrafts are rarely common these days and the process of getting a loan from any commercial bank is rigorous, extremely stressful, and excruciatingly time-wasting. Then commercial banks do not provide loans without collateral, and small loans which customers intend to pay within a very short time are not their specialty.

This is where micro loan platforms have the upper hand. These platforms are usually online platforms, powered by microfinance banks, providing small to medium-sized loans for members of the public. Their features make them more welcomed by people; getting loans from these platforms is usually completely free from any form of stress, free from collateral and they are extremely available. Another impressive feature about these platforms is the fact that they can be accessed from the comfort of your homes, offices, and basically anywhere, as long as you have a phone that has access to the internet and an active internet connection.

Microloan platforms are really popular in Nigeria and across Africa. This is because of how accessible they are and how instant users can get loans; it is as simple as registering and getting a loan almost immediately in many cases. There exist microloan platforms for individuals seeking a personal loan and businesses that require these loans.

In as much as microloan platforms have a track record of providing loans for many individuals, they are fast becoming a threat, according to some users. Some users have shared experiences that may qualify these micro loan platforms as Curate’s eggs; although they are in existence to help individuals, they sometimes can be a threat to people who apply for these loans.

According to several individuals, many of these loan platforms go as far as enforcing outrageous late payment fees when they fail to pay. According to what I found out, many of these loan seekers think that the interest rates that apply to these loans are too much especially because the loans are usually given out to be repaid after a two-week period, and that many of these loan seekers take it because they have no other option at that moment.

Recently, the National Information Technology Development Agency (NITDA) fined Soko Loan – a microloan platform, the sum of N10 million for privacy invasion. The microloan platform was found guilty of illegally tampering with the data of users. Essentially, Soko Loan took access from their users’ phones without their permission and kept texting their contacts when they failed to pay their loans. Apart from the N10 million fine, the NITDA ordered the loan platform to stop sending messages to the contacts of users.

Now, this is just one loan platform in many. Many other loan platforms are guilty of these unethical practices too. I had a talk with someone who doesn’t want to be named, who had had quite an uneventful relationship with microloans platforms. As she would like to describe herself, the “victim” said that she came into contact with microloan platforms early this year. According to her, her very first loan was N5,000, which is about the highest amount that many of these platforms offer first-time users. She said that she was given a period of two weeks to pay back the loan and she did in about a week as she had needed the loan to sort a minor and immediate problem. According to her, the plan was to stop using the service but she soon ran into a need for the service again. She built her credit and was soon able to access higher loans, but the time period for repayment had not been increased to more than two weeks so she felt like she had to be on her toes. She described her last experience with the loan service as a sour one.

She said her last loan with the service was N12,000 and the total money she had to pay after two weeks was approximately N16,000. She said she was unable to pay after the two weeks which brought a late payment fee. She was also unable to pay at that time and this brought about many consequences which she said she wished she could forget. She said the loan service started sending text and WhatsApp messages to her contacts demanding them to require her to pay up her debt. According to her, she had also received threats of being arrested by the police and photos of her being posted across social media platforms from the loan platform. She said that she had never felt more embarrassed in her life and after paying up, she promised that she would never take a loan from any of these platforms no matter how tough the situation is. She said that the amount she eventually paid was close to N30,000 from the original N12,000 she borrowed.

Other “victims” also had similar or almost similar experiences to share and I concluded that microloan platforms in Nigeria are just another Curate’s egg. As part of my finding, I also downloaded two different apps to find out about how the interest rate and durability for the loan works and I think borrowing from these platforms might be a bad idea and should be completely avoided if they can.  The first offered me a loan of N5,000 with an interest of N1,200 for two weeks. Another showed that I could borrow up to N13,000  at a 20 percent interest to repay N15,600 after two weeks. The third was willing to borrow me N16,748 to repay N21,200 after two weeks.

Nigerian micro loan platforms might be a saviour for many individuals but at the same time, the inability to pay back loans on time incurs their wrath. It is therefore advisable that one should stick to their rules if one decides to use them.