By ADEBAYO OBAJEMU
When the online lenders such as Fairmoney, Quick Check and other online lending application sites came on board a couple of years ago, many Nigerians were happy that finally they could access loans within less than 30 minutes to meet their needs.
Actually the new online lenders came in handy as many Nigerians in need of quick loans are now able to access the loans without much ado, unlike the hassle and possible rejection of their applications and tough requirements demanded of them by conventional commercial banks.
In recent years, the Nigerian fintech space is making wave, blossoming exponentially, and at the same time drawing the attention of both foreign and local investors and drawing new entrants into the diverse sub-sectors within the ecosystem.
A good number of them such as Fairmoney, Renmoney and others have made good offering uncollateralized loan facilities to Nigerians albeit at eye-popping interest rates.
On this point of interest rates, it would look as if some have met and agreed to come down hard on defaulters, resorting to unbelievably desperate measures to recover loan facilities obtained from their apps.
Findings made by Business Hallmark have revealed that a great number of the loan app operators now send embarrassing short messages service (SMS) and WhatsApp messages to the close contacts of their loan defaulters with the intention of shaming the defaulters, tagging them with terms like ‘criminal,’ ‘fraudster,’ and ‘terrible debtor’ among others.
In some cases, the full names, phone numbers and pictures of the alleged loan defaulters are shared with their contacts like religious leaders, members of churches and mosques, close friends, bosses, colleagues and family members.
But the National Information and Technology Development Agency (NITDA) has described the debt recovery strategy adopted by some of these fintechs as a data-sharing breach.
BusinessHallmark investigations showed that the agency does not support such “ambushed tactic of debt recovery” and emphasized that no fintech firm is allowed to share its customers’ data without due process.
This was made known in a press release last year by NITDA’s spokesperson, Hadiza Umah.
To curb the trend, NITDA imposed a sanction of N10 million on an online lending platform, Soko Lending Company Limited (Sokoloan), for data privacy invasion.
According to NITDA, it received a series of complaints against the company, including ‘unauthorized disclosures, failure to protect customers’ personal data, and defamation of character.
In view of the fact that majority of these online lenders charge high interest rates and expect their loan beneficiaries to pay back within shortest time, some seven days, or 14 days the maximum tenure is one month, many desirous of accessing loans for one reason or the other are now wary of approaching online lenders.
Adegoke Sanmi, a mechanic said “I will not go to them for loan again. I approached one of them last year for a loan of N10,000 to be paid back in seven days. On that date, when I was making frantic efforts to repay the loans, I started receiving calls from people in my contacts that an online lender sent them text messages that I’m a chronic debtor and criminal.”
Many people who have been victims of such crude tactic of debt recovery told this medium that they prefer to join contribution groups instead of these online lenders.
In view of the unwholesome experiences of Nigerians in the hands of online lenders, the arrival of a Nigerian startup, Earnipay, which has raised $4 million to provide on-demand salary to workers would be a refreshing new dawn. But only salaries earners can benefit from the scheme.
Earnipay is a financial technology solution that gives on-demand salary access to income-earners, it announced last Friday it landed a seed deal of l $4 million to scale its operation in Africa.
Making the disclosure was Maria Adediran, Earnipay’s accounts director, in a statement to the media, seen by BusinessHallmark.
Founded in 2021 by Nonso Onwuzulike, Earnipay officially launched operations in January with less fanfare.
At the launch, the Fintech company said its aim is to improve employees’ financial well-being by partnering with employers and seamlessly integrating with their payroll systems to offer its services to employees, who can then track and withdraw their accrued salaries via the app on any day of the month.
“At the end of the month, the employer deducts from the employee’s salary the amount withdrawn, refunds Earnipay with it, then pays the employee the balance as their salary for that month,” the firm said.
“Earnipay charges employees a small processing fee of N250 or N500 for this access. There is no payback and no interest charge because employees are accessing what they have worked for, it’s their money,” the statement said.
According to Earnipay, the funding round was led by Canaan, with participation from XYZ Ventures, Village Global, Musha Ventures, Ventures Platform, Voltron Capital and Paystack.
According to the company, with the seed funding, Earnipay will accelerate the development of its technology platform to serve large enterprise employers. By doing so, Earnipay will provide employees with the tools they need to make better financial decisions and improve their quality of life.
The company says it would offer its on-demand salary solution to 200,000 employees by the end of 2022.
Speaking on the funding round, the CEO Nonso Onwuzulike, said “Financial worries are the leading cause of distractions in the workplace. The monthly pay cycle means employees are often unable to afford daily expenses, cover emergencies or take advantage of immediate financial opportunities.
“As a result, they become exposed to predatory payday loans and get stuck in unending debt cycles with unrealistic payback periods and expensive interest rates.
“Earnipay exists to address this problem and offer an ethical alternative to instant salary access while helping employers improve employee engagement and retention at zero cost to their business.
“The future of salary is on-demand, and we’re excited to be pioneering this amazing solution in Africa. I’m delighted to be collaborating with a group of highly respected investors who understand the need for a platform such as Earnipay to drive better access to salaries, and, importantly, to improve the financial well-being of income-earners in Africa,” Mr. Onwuzulike said.