Introduction: 

Mr. Okechukwu Unegbu, a seasoned financial expert and former president of the Chartered Institute of Bankers of Nigeria, has raised concerns about the increasing presence of loan sharks in the Nigerian financial landscape. He deems them detrimental to the economy and calls for urgent measures to address this issue. Unegbu emphasizes the role of Microfinance Banks (MfBs) in curbing the menace of loan sharks and urges the Central Bank of Nigeria (CBN) to empower them for more effective lending to small businesses.

The Menace of Loan Sharks: Unegbu expresses deep concern over the impact of loan sharks on the economy, highlighting their unethical practices. These digital lending platforms offer loans at exorbitant interest rates and resort to threats for debt collection. Unegbu emphasizes that the actions of these loan sharks violate the consumer protection regulations set by the CBN, which mandate fair and transparent debt recovery processes, free from intimidation or harassment.

Empowering Microfinance Banks: Advocating for a solution, Unegbu suggests that Microfinance Banks are better positioned to offer lending services, especially to small businesses. He urges the CBN to empower MfBs, enabling them to fulfill their mandate effectively and serve as a viable alternative to loan sharks. Unegbu believes that supporting MfBs will contribute to the eradication of illegal lending practices in Nigeria.

CBN's Stance on Loan Sharks: The CBN, in line with consumer protection regulations, emphasizes the need for fair debt collection practices. The central bank discourages individuals from borrowing from loan sharks and encourages seeking funds from regulated institutions. However, during a recent Monetary Policy Committee meeting, the suspended CBN governor, Godwin Emefiele, acknowledged the challenge of regulating loan sharks, particularly in rural areas where they are predominantly located and often operate without registration.

Government Approval of Digital Lending Platforms: In a bid to protect citizens from the adverse effects of loan sharks, the Federal Government has approved 173 digital lending platforms to operate in Nigeria. This move, spearheaded by the Federal Competition and Consumer Protection Commission, aims to offer legitimate and regulated alternatives to citizens in need of financial assistance. Approved platforms include Sycamore Integrated Solutions Limited, Trade Depot, Tajow Investment, and others.

Conclusion: As the concern over loan sharks grows, financial experts like Unegbu stress the urgency of addressing this issue to safeguard the Nigerian economy. The call for empowering Microfinance Banks and the government's approval of regulated digital lending platforms signal steps towards providing safer and more transparent financial options for individuals and businesses in need. The collaborative efforts of regulatory bodies, financial institutions, and the government are crucial in eliminating the risks posed by loan sharks in Nigeria.