Nigeria’s online money lending space nears disruption

In January, Ventureburn reported that Nigerian gift card company SureGifts had rolled out SureCredit, a unique way to obtain loans. Even though many industry stakeholders were conflicted over Nigeria’s readiness for loans in the online space, platforms such as quickly caught the public eye.

As extensively useful as credit in general is, the system has been marred by various laws and flaws, presenting barriers to loan seekers. These factors have made the services inaccessible to those really needing to utilise them. This has forced loan/credit seekers in Nigeria to look elsewhere, with some seeking alternatives online.

“No one that I know of is approaching banks for loans because they are very sure they will be denied and/or frustrated by the bank’s ridiculous document and collateral demands, not forgetting the uncomfortable conditions, outrageous interest rates and frustratingly annoying delays,” said business expert Segun Adedapo.

According to TopCheck — a company that connects loan seekers with traditional banks, microfinance banks, and private lending institutions — Nigerians have been in search of loans since the government deregulated its currency. In a statement, the company revealed that there have already been more inquiries about obtaining loans online than before the currency deregulation.

“During the two months before the devaluation, when black market rates spiked, we already experienced an increase in loan search volumes by roughly ten percent, but since the devaluation the situation changed dramatically. We now see an increase in demand for loans by an astonishing 29% daily,” says Christian Wiesner, co-founder of

“Our clients tell us that they cannot afford the way of living they used to have as prices of imported goods have exploded, even more than the change in exchange rate,” continues Wiesner.

Market ready for online money lenders

With this report and other indexes, there is an indication emerging that online credit services may be Nigeria’s next tech-based gold mine. The sector has the ability to take attention off ecommerce and payment services. The major problem is how to ensure people pay back what they borrow.

In an off-record conversation with individuals who had borrowed from, a reluctance to pay up was revealed and some said they tried the service to see if they can get away with it. This is because it’s easier to perpetrate fraud online than in banks, necessitating the need to put in place appropriate measures. But TopCheck’s Damilola Taiwo affirmed that there are no special laws in Nigeria for online lending as online money lending is regulated to the same degree as offline money lending.

Stakeholders can argue that no special regulations should be required for online money lending since there are no special rules for ecommerce and online payment. But are startups going to risk lending people money without a physical encounter and collateral? The increased demand for online money lending suggests that investors may take bold risks and give the market a shot.

“Based on the data we see currently, the demand for loans is bigger than the supply. We believe customers are definitely ready for online loans, but money lenders, especially retail banks, haven’t adjusted to this new opportunity yet. The demand for cash loans is huge, our traffic numbers increase on a daily basis and due to the economic situation currently, we not only see a shift from offline to online, but also an overall increase in demand for cash loans without collateral,” Taiwo said.

Getting the market ready

It is very obvious that Nigeria’s online lending market isn’t ready yet as many things need to be put in place, including provision of more liquidity for entrepreneurs.

“It would be great to provide more liquidity to the market, especially for people willing to start a new business. Currently, it is very hard for (new) business owners to get a loan due to the strict qualification criteria by the banks,” he said.

“Additionally, some loan companies already implemented 100% digital processes, which is great, but others still require a lot of paperwork, which drives down efficiency of all parties involved. We hope to see improvements here soon as well,” continued Taiwo.

Taiwo found a way to pitch TopCheck’s roles in the future of the ecosystem. According to him, the company’s loan price comparison brings transparency and a high level of convenience into the market. But he added that the company believes that the sector is growing. Right now, loan seekers don’t have to be stuck in traffic in order to get quotes from multiple money lending institutions since all can now be done online. This, he said, gives an idea of how big the online lending space could become in the future.

“We believe that the online loan segment will soon outperform the traditional way of lending. Also on the supply side, there are great companies emerging that will steal market shares from traditional banks, e.g. RenMoney or Page MfB.”

Feature image: HelenCobain via Flickr.

Paul Adepoju


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