Yinka woke up in the wee hours one morning to his phone ringing repeatedly. He reluctantly checked his phone. As soon as he realized who the multiple calls had come from, he sat upright. It was a friend. “Did you borrow money from them?” the friend asked from the other end. Distressed, he quickly checked his social media applications. Notifications were pouring in from them. Cashbus, a loan app, Yinka said, “had sent several defamatory messages to every contact on my mobile phone. They said I was a criminal and that the populace should avoid me.”
This is the story of many victims of illegal loan shark apps following the economic downturn caused by the COVID-19 pandemic in 2020. At the advent of that outbreak, the Federal Government of Nigeria had declared a lockdown of major economic states and cities in the country, which were worst hit by the virus. The lockdown halted economic activities and strangled a number of small business owners. Economic activities gradually returned, but the effect of the lockdown had pushed people into borrowing from illegal loan apps in their thousands.
The pandemic caused unprecedented economic vulnerability.
In the third quarter of 2020, the Central Bank of Nigeria (CBN) reported that the economy was contracting and was at its worst decline since 1983. Nigeria had experienced a recession in 1983, contracting at -10.93 percent. Similarly, the National Bureau of Statistics (NBS), Nigeria’s most-reliable and go-to source for factual statistical information, had estimated that over 80 million Nigerians were living in extreme poverty in 2020. In the fourth quarter of the same year, it progressed to 105 million, according to the 2020 World Poverty Clock report.
“I had nothing again,” 29-year-old Yinka told the press. “The lockdown doubled the price of food, the cost of everything was high, and I got low pay from work.” As a graduate student, he was now working as a driver at a local bakery. He said, “The bakery was heavily reliant on the patronage of the university students, but the lockdown and the industrial action of university lecturers [ASUU strike] pushed the students away from the community. Expenses were soaring, family needs were piling up and I needed help.”
Many victims’ stories were similar to that of Yinka.
Juliet Mary is a 51-year-old mother of four and federal government worker for the Federal Ministry of Science, Technology and Innovation. She runs a medium-scale poultry farm in her compound and things were running smoothly until her research institute did not get a monthly salary for January the next year. Due to unpaid salaries, many civil servants like Juliet were forced to access new credit services to make ends meet. Loan sharks have multiple illegal money-lending apps on the Google Play Store. When users download any of them, the lenders ask for information and access to calendars, photos, messages, location, phone contact, and even battery percentage. At the verge of disbursing the loan, applicants are told to submit their Bank Verification Number (BVN), bank statement, and bank card details. Out of desperation, some users grant the access – sometimes unknowingly – and the data is used by the loan sharks to terrorize them.
In August 2021, Nigeria’s central IT agency, the National Information Technology Development Agency (NITDA), imposed a sanction of N10,000,000 ($23,900) on Soko Lending Company Limited for privacy invasion. “I saw the terms of Sokoloan on a Facebook ad, but I was unaware that the service had been blacklisted by the Federal Government,” Juliet said. “Towards the last days of February (2022), I borrowed N18,000 ($43) from the Sokoloan app. During the application, the app displayed 92 days as the minimum loan tenure but after I had submitted my data, I saw an interest rate of (about) 45 percent for 14 days.”
Recovery agents of these loan sharks send defamatory messages to contacts.
In March 2022, amidst the unethical and illegal practices of Sokoloan and its affiliates (Go Cash, OKash, Kash Kash, and Speedy choice), the Nigerian government shut down their operations. Juliet said, “The 14-day loan tenure elapsed – I could not pay up. The exorbitant late payment charges were adding up daily and I was frightened.” Although their operations had been shut down, Juliet said that defamatory messages were still sent to her phone contacts. She said, “The recovery agents [of Sokoloan] pressured and threatened me and in few days, the late payment fee was exceeding the loan. Eventually, my salaries were paid, but astonishingly, Sokoloan deducted a double amount of the loan and the late payment fee.”
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