Chairman of the Alliance for Economic Research and Ethics, Dele Oye has expressed concern over the rising burden of high-interest digital loans in Nigeria, stating that poor and vulnerable Nigerians are trapped in a cycle of debt from digital lending platforms charging more than 300 per cent interest per annum.
In a statement headlined, “The Mathematics of Marginalisation: Decoding Nigeria’s Poverty Premium,” Oye claimed Nigeria’s economic system was gradually penalising poor individuals, requiring them to pay more for basics such as food, healthcare, housing and access to credit.
The Guardian said that he also called on the Central Bank of Nigeria (CBN) and other relevant regulatory agencies to introduce interest rate restrictions on digital loans and to boost consumer protection to defend against exploitative lending practices.
“The complex economic terrain of Nigeria has a brutal mathematical reality that continues to exist; it is profoundly expensive to be poor,” Oye said.
This pattern, known as the poverty premium, systematically means that those with the least liquidity pay the highest rates for fundamental goods, services and loans. Poverty is not simply an emotional burden but rather an exploitative economic device.
The latest statistics from the World Bank suggests that 41.82 per cent of Nigerians live below the international poverty level of $3.00 per day, while 47.03 per cent are multidimensionally poor.
“When 140 million people are moving through an economy that punishes scarcity, the financial extraction that results is not a failure of an individual but a design flaw of the system.”
He said that many financially excluded Nigerians who have no access to reasonable bank credit are resorting to digital loan applications where exorbitant interest costs and hidden fees sometimes compound their financial woes.
The article mentioned incidents of N65,000 loans taken by borrowers who paid N93,000 within seven days, with penalties for default pushing the debt as high as N158,000.
Such tactics have created a poverty trap, where individuals with the least financial resources generally pay the highest rates to survive, Oye added.
The poor cannot take advantage of economies of scale, Oye said, because they tend to buy food goods in lesser quantities, making the commodities more expensive than they are for wealthy households that can buy food in bulk.
He also voiced concern about the expense of healthcare. Poor families often have to wait to get medical help until the problem becomes more costly to address, he said, because they can’t afford preventative therapy.
He said: “The biggest downside of low income is not being able to benefit from economies of scale. Rich people buy things in bulk like a 50kg bag of rice that will last them a couple months.
On the other hand, the low income earners have to buy micro-units from roadside vendors or open markets on a daily basis. These micro-transactions are hugely marked up.
Meanwhile, stakeholders have cautioned that Nigeria could lose an estimated $88 billion economic gain predicted from complete digital inclusion by 2030, if ongoing impediments to broadband development, cheap connectivity and digital access are not addressed.
The warning comes as industry leaders said despite more than two decades of private investment that grew Nigeria’s telecommunications sector from less than 500,000 telephone lines before GSM liberalisation to more than 200 million active subscriptions, millions of Nigerians especially in rural communities and small businesses remain underserved due to infrastructure, policy and affordability challenges.
Gbenga Adebayo, Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), has said addressing multiple taxation, inconsistent Right-of-Way policies, infrastructure vandalism, rising energy cost, foreign exchange volatility and affordability constraints are key to sustaining investment and bridging the digital divide. Speaking at the Nigeria Information Technology Reporters’ Association (NITRA) Innovative and Scientific Conference in Lagos, Adebayo said the government must remove the bottlenecks that continue to hinder the growth of the industry.
Telecommunications is no longer an industry, it is the bedrock on which Nigeria’s digital future is being created. “Every dollar invested in resilient telecommunications infrastructure is an investment in economic growth, innovation, national security and inclusive development,” he said.
However, he added holding operators accountable is not the only thing that will improve service quality, as inconsistent electricity, fibre cuts, insecurity, infrastructure vandalism, Right-of-Way delays and various levies continue to erode network performance.
Operators should not be made “convenient scapegoats” for disruptions caused by failures across the wider operating environment, he said.
Transporting broadband capacity outside of Lagos remains a significant challenge for nationwide connectivity, said Adebayo, with Right-of-Way charges comprising as much as 50% of fibre project costs in some areas. While some states say permits are free, he noted, development and infrastructure fees can add to deployment costs. He asked for a revision of Nigeria’s internet access strategy, wider fibre penetration and more infrastructure sharing.
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