Expert Warns Over Digital Loan Interest Poor Nigerians Paying the Poverty Premium Highest Price

By AfreecanImage News Desk

The Chairman of the Alliance for Economic Research and Ethics, Dele Oye, has warned that millions of low-income Nigerians are being trapped in a cycle of poverty by high-interest digital loans and rising living costs, urging regulators to take urgent action to protect vulnerable consumers.

In a statement titled "The Mathematics of Marginalisation: Decoding Nigeria's Poverty Premium," Oye argued that Nigeria's economic system disproportionately penalises poor citizens, forcing them to pay more for essential goods, healthcare, housing and access to credit.

Digital Loan Apps Under Scrutiny

Oye expressed concern over the rapid growth of digital lending platforms that charge annual interest rates exceeding 300 per cent, describing the practice as exploitative.

He called on the Central Bank of Nigeria (CBN) and other regulatory agencies to introduce interest rate caps on digital loans and strengthen consumer protection laws to curb predatory lending.

According to him, many Nigerians who cannot access affordable bank loans are turning to digital loan applications, where excessive interest rates, hidden charges and penalty fees often deepen their financial hardship.

One example cited involved a borrower who received a ₦65,000 loan but was required to repay ₦93,000 within seven days. Following default penalties, the debt reportedly increased to ₦158,000.

Poverty Premium Worsening Financial Hardship

Oye said the phenomenon known as the "poverty premium" means people with the least financial resources often pay the highest prices for survival.

He cited World Bank figures indicating that:

• 41.82% of Nigerians live below the international poverty line of $3 per day.
• 47.03% experience multidimensional poverty.
  
  

    

He explained that low-income households are unable to benefit from bulk purchasing and are forced to buy food in small quantities at higher prices. Similarly, many delay seeking medical care because they cannot afford preventive treatment, resulting in more expensive healthcare costs later.

According to Oye, these conditions create a cycle in which poverty becomes increasingly difficult to escape.

Nigeria Risks Missing $88 Billion Digital Economy Opportunity

Meanwhile, industry stakeholders have warned that Nigeria could lose an estimated $88 billion in economic gains expected from full digital inclusion by 2030 if barriers to broadband expansion and affordable internet access are not addressed.

Speaking at the Nigeria Information Technology Reporters' Association (NITRA) Innovative and Scientific Conference in Lagos, the Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Gbenga Adebayo, said the telecommunications sector remains critical to Nigeria's economic growth and digital transformation.

Telecom Operators Highlight Key Challenges

Adebayo identified several challenges affecting broadband expansion and service quality, including:

• Multiple taxation.
• High Right-of-Way charges.
• Infrastructure vandalism.
• Rising energy costs.
• Foreign exchange volatility.
• Inconsistent government policies.
• Poor affordability for consumers.

He noted that although Nigeria has grown from fewer than 500,000 telephone lines before GSM liberalisation to over 200 million active subscriptions, millions of Nigerians—particularly those in rural communities—still lack reliable digital access.

He called for wider fibre deployment, greater infrastructure sharing and policy reforms to improve broadband penetration nationwide.

Experts Call for Urgent Reforms

Both economic and telecommunications experts stressed that addressing exploitative lending practices and expanding affordable digital infrastructure are essential to reducing poverty, promoting financial inclusion and unlocking Nigeria's long-term economic potential.

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