Many entrepreneurs, start-ups and foreign organisations are delving into digital money lending market. The reason isn't far-fetched. A lot of activities is ongoing in this space. It is obviously the reason why people today seek information on how to set up a digital money lending company in Nigeria.
In this article, we have covered all of the details that can help you kick off your adventure into the digital money lending market in Nigeria. Let's get started with some information about the industry itself.
The Digital Money Lending Industry
The digital money lending industry is strictly regulated. Therefore, it is important to clarify certain important details you have to take note of to set up a digital lending service in Nigeria.
To be a digital lender in Nigeria or to operate a digital
lending platform, you have to be licensed. But first, who are
digital lenders?
Digital lenders are credit facilities and loan providers that make
these services accessible to customers from a digital
perspective.
Noting that to get started in the digital money lending market,
you have to be licenced, we would thus proceed to look at licensing
procedures and requirements provided for by the law.
Licencing Procedures To Operate A Digital Money Lending Company In Nigeria
Step 1: Incorporate a company with CAC in Nigeria with a minimum of twenty million minimum share capital.
Step 2: Obtain CBN's License (the most commonly used by digital lenders like Fairmoney, Renmoney is the Micro Finance Bank License as there is no actual licence called the digital lenders license in Nigeria) or the prescribed State Money Lending License.
The procedure on how to obtain a money lender's license in Nigeria may vary with the particular state involved.
The procedure for obtaining a money lenders license in Lagos State, Nigeria, is stated in the next subheading below.
Steps To Acquire A Money Lender's Licence In Lagos State, Nigeria
Step 1: Formal application to State's Commissioner of Police accompanied by incorporation documents and formal application of applicant
Step 2: Upon issuance of clearance report by the Police, make the required application to Chief Magistrate accompanying the required incorporation documents
Step 3: Upon confirmation of due diligence and issuance of money lender's certificate alongside recommendation for the issuance of a money lender's license. Afterwards, a formal application may be made to the Lagos State Ministry of Home Affairs attaching the following:
- Evidence of payment of tax for all directors (for the past 3 years);
- If it's not a new company, the applicant must also attach a company's tax clearance certificate.
- A reference letter from the company's bankers;
- Proof of payment of the Money Lenders License fee in the sum of N200,000 (Two Hundred Thousand Naira);
- Proof of Application Form Fee of N25,000 (Twenty-Five Thousand Naira)
Step 4: After due confirmation, physical visit to office and satisfaction of all requirements, the Money Lender's License would be issued and is valid for a period of one year.
Importantly, other than the above application requirements, the FCCPC 2022 guidelines has provided a digital lending guideline Form 001 to be completed attaching the documents stipulated in the guidelines.
Procedure for Digital Lenders Registration With FCCPC
Itemized below are the procedures for digital lenders registration with FCCPC.
1. Applicants are required to download and completely fill out the Forms (Form 001 and 002) from the Commission's website.
2. Applicants are required to attach the documents listed out in the First Schedule of this document.
3. Applicants incorporated before April 2023 are required to provide a Statement of Justification that sufficiently articulates an acceptable reason for failing to conclude or complete the registration before the expiration of the previously set deadline.
4. Applicants incorporated before April 2023 are required to
make payment of the late Processing Fee in the sum of Five Hundred
Thousand Naira (₦500,000.00) via the Remita platform. Please
note that this affords the Applicant the opportunity of registering
two (2) apps.
Note: Applicants incorporated after April 2023 are
exempt from paying the late Processing Fee.
5. Applicants are allowed to register a maximum of five (5) apps only. 6. Applicants desirous of registering additional apps shall pay an additional fee of Five Hundred Thousand Naira (₦500,000.00) for each additional app.
7. Applicants can commence the registration process while applying for and awaiting the Audit Trust mark from the Nigerian Data Protection Commission and the Compliance Audit Report and Privacy Impact Assessment Report from a duly registered Data Protection Compliance Organisation (DPCO).
8. Applicants licensed by the Central Bank of Nigeria as a Microfinance Bank are required to apply to the Commission for a Waiver from registration. Such Applicants must however, fill and submit the Forms (Form 001 and 002) and attach the documents listed out in the First Schedule of this document.
It is vital to point out that procedures for application for money lender's license varies with the state. While we have explored the procedures in Lagos State.
Furthermore, legal advisory is necessary for a robust information on the licensing framework for money lending in Nigeria.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.