The Nigerian Consumer Credit Corporation has warned lenders and credit providers against using abusive, intimidating or unlawful methods to recover debts, stressing that failure to repay a loan does not by itself make a borrower a criminal.
The warning forms part of CREDICORP’s broader effort to promote responsible lending and strengthen consumer protection as access to credit expands across Nigeria. The Federal Government-established development finance institution says its mandate includes removing barriers to consumer credit while encouraging responsible practices among financial institutions.
CREDICORP’s position is particularly relevant as more Nigerians gain access to digital loans, consumer financing and other forms of credit. Increased access to borrowing also creates a greater need for clear rules governing how lenders communicate with customers who fall behind on repayments.
A borrower who is unable to repay a loan on schedule may be in default or breach a contractual obligation, depending on the terms of the agreement. That situation, however, does not automatically mean the borrower has committed a criminal offence.
Debt recovery should therefore be handled through lawful channels rather than through threats, harassment, public humiliation or other tactics designed to intimidate borrowers into making payments.
The distinction is important because lenders have a legitimate right to seek repayment of money owed to them, while borrowers are also entitled to protection from abusive collection practices. Responsible credit systems require both interests to be recognised.
CREDICORP was established as a development finance institution of the Federal Government with the mandate of expanding access to consumer credit for Nigeria’s working population. Its approach is based on providing funding and credit guarantees to financial institutions, strengthening credit infrastructure and promoting responsible borrowing and lending.
The corporation's emphasis on responsible lending comes as Nigeria's consumer-credit market continues to develop. Easier access to loans can help individuals finance important purchases and manage temporary financial pressures, but excessive or poorly managed borrowing can also leave consumers struggling with repayments.
This makes responsible lending important from the beginning of the credit process. Lenders need to assess whether customers can reasonably afford the facilities they are being offered, while borrowers need to understand the cost, repayment schedule and consequences of default before accepting a loan.
When a borrower falls behind, the preferred approach should be to communicate clearly, establish the outstanding obligation and explore lawful repayment arrangements where appropriate.
Debt recovery can ultimately involve formal legal procedures where a borrower refuses or is unable to settle a legitimate debt. However, the existence of a debt and the use of lawful recovery mechanisms are different from criminal prosecution.
The warning is also significant for digital lending companies, whose rapid expansion has previously generated concerns about aggressive collection practices and the treatment of borrowers' personal information.
Consumers who take loans should equally understand that borrowing creates a contractual obligation. CREDICORP's position does not mean that borrowers can simply refuse to repay legitimate debts without consequences. Rather, it reinforces the principle that lenders must pursue repayment within the law.
A healthier credit market therefore depends on responsible behaviour from both sides. Financial institutions need effective systems for assessing creditworthiness and managing defaults, while borrowers need to make informed decisions about how much they can afford to borrow and repay.
For lenders, the message is that recovering money owed should not come at the expense of a borrower's dignity or legal rights. For consumers, the development underscores the importance of reading loan agreements carefully and seeking assistance early when repayment becomes difficult.
The issue also has implications for Nigeria's wider financial inclusion agenda. CREDICORP aims to expand access to consumer credit to a significant proportion of the country's working population by 2030, meaning the number of people interacting with formal lenders could continue to increase.
As the market grows, effective consumer-protection standards will be increasingly important in maintaining public confidence in formal credit.
The challenge for regulators and industry participants will be to ensure that increased access to loans is accompanied by transparent pricing, responsible credit assessment, fair collection procedures and appropriate avenues for resolving disputes.
For borrowers facing repayment difficulties, the safest approach remains to communicate with the lender, understand the terms of the agreement and use available formal channels to negotiate or resolve the outstanding obligation rather than ignoring the debt.
CREDICORP's warning consequently highlights a broader principle for Nigeria's expanding credit market: a debt is a financial obligation that can be pursued through lawful means, but indebtedness alone should not be treated as a crime.
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