Digital lenders are retreating from unsecured instant loans, shifting new credit toward borrowers with verifiable income, credit histories and predictable cash flows.
The change follows the Federal Competition and Consumer Protection Commission’s Digital, Electronic, Online or Non-Traditional Consumer Lending Regulations, 2025, a tougher regulatory stance and rising operational costs that make tiny, short-tenure loans commercially unattractive. A court has upheld the DEON Regulations and the FCCPC announced immediate resumption of implementation and enforcement.
Industry leaders say the model for so-called nano loans, typically with maximum tenures of about 30 days, is undercut by high default rates and the fixed costs of originating and collecting many small accounts. Gbemi Adelekan, CEO of KwikPay Credit and president of the Money Lenders Association, said lenders are moving away from unsecured nano loans and refocusing on business lending tied to verifiable cash flows.
Sycamore CEO Babatunde Akin Moses framed the economics starkly. He said a single ₦1 million loan is easier to underwrite and service in aggregate than distributing the same amount in ₦5,000 loans to 200 customers, because each small account still requires onboarding, assessment, monitoring and recovery efforts that drive operating costs up.
An anonymous executive at a digital lender confirmed the shift, saying the company has reduced exposure to unsecured lending and concentrates on customers with demonstrated repayment capacity. Lenders also cited fraud, funding costs and recovery difficulties as additional pressures on the nano-loan business case.
The FCCPC’s enforcement push has produced tangible market effects. The regulator has approved registration for 525 digital lenders and granted waivers to 33 entities already licensed by the Central Bank of Nigeria. Most companies operate multiple apps, placing more than 1,000 loan apps under the FCCPC’s oversight. The commission also has 112 apps on a watchlist and has had 54 apps removed from the Google Play Store for breaching the rules.
Stricter oversight, accompanied by a stated zero-tolerance policy on abusive recovery practices, has reduced unethical collection methods, industry figures said. App stores and payment platforms are also enforcing compliance, narrowing operating channels for unregistered lenders.
Despite a rise in loan applications as households seek short-term relief from income pressures, the regulatory and economic realities mean consumers without verifiable income will likely see reduced access to instant credit. With the DEON Regulations now fully enforceable, lenders say the market will tilt toward longer-tenure instalment products, business finance and customers whose repayment ability can be proven.
