FG’s raid on loan sharks

Recently, the Federal Government reportedly clamped down on online and illegal credit firms whose operations were patently outside the ambit of the law. And there are so many of them in the system. They came into the credit facility space and thrived and burgeoned as a result of the parlous state of the domestic economy which has caused many to become poor and desperate. These loan firms give seemingly cheap credits to impoverished citizens, ostensibly under less than stringent conditions that seem to disobey the basic canons of credit. But the truth is that both the pricing of the credits that lack full disclosure and the lax terms and conditions are all subterfuges to hoodwink unsuspecting beneficiaries to take the bait only to realise the full extent of their burden when repayment starts.

In the event of a default, the illegal credit firms bare their fangs, deploying verbal assault and cyber-bullying to great effect on the defaulters, their relations and friends on their phone contacts. Some of their defaulting clients are known to have committed suicide or become suicidal when they turned the heat of loan recovery on them. It is, therefore, a welcome development that the government is raiding such Shylock firms in order to rein in their atrocious activities within the system. However, beyond the clampdown which, of course, is perfectly in order and desirable, there is the imperative of interrogating how the country came to this sorry pass and fixing the problem. The unpleasant trend of citizens borrowing for consumption and some unscrupulous loan firms latching onto that to profiteer or mete out degrading treatment to borrowers when they default has persisted only because of hardship among the populace. The reality is that it is increasingly becoming difficult for people to survive due to a worsening economy. Businesses die at will and industries shut down due to the harsh economic climate and the volatile and hostile environment.

Most Nigerians manage to sustain themselves by resorting to inconceivable means and falling victims of a weak system. And it cannot be gainsaid that the government›s failure is responsible for the vulnerable condition of the hapless citizens who are borrowing to meet basic needs and face degrading treatment in the hands of Shylock loan companies for defaulting on loan repayment. Therefore, it is the economic problem that has to be officially tackled head-on so as to give opportunity to potential economic actors to earn a living rather than resorting to take loans which they will find difficult to pay back because many of them are actually borrowing to feed.

Fixing the domestic economic challenges may take a while to yield the quantum of dividends that citizens expect in the immediate period, but it is the most effective and enduring  panacea for correcting  the  malady in the referenced illegal credit system, and so must be officially pursued aggressively. Thus, while it is understood that creating socioeconomic conditions that ensure that the Shylock loan firms are bereft of clients is the surest way to stamp out the extortionists out of the system, the ongoing official clampdown on illegal loan organisations should by all means continue. And in this regard, we applaud the steps being taken by the Federal Competition and Consumer Protection Commission (FCCPC). At a media chat few days ago, Babatunde Irukera, the executive vice chairman of the commission, revealed that the commission had frozen no fewer than 30 bank accounts operated by illegal loan organisations. Irukera also said that the commission had engaged Google and Apple Store to take down some loan applications from their stores, noting, however, that there were certain processes required for that to happen. And to dampen the impact of the unintended consequences of the clampdown on legal lenders, he also said that the commission was currently engaging three major loan companies whose businesses had been adversely affected by the commission’s raid. These are really commendable official measures.

Yes, some of these loan organisations may have filled certain obvious gaps in the cash flows of their clients while making economic rent from their transactions, but that cannot be sufficient justification to act outside the law. In particular, the deplorable antics of the loan firms—who do not make full disclosure to their customers  of the true costs of their loans,  breach the privacy of their clients at will and send unsolicited messages to contacts on the phones of their customers threatening fire and brimstone—are not what any sane society should condone.

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