REGULATION | Nigeria’s Consumer Watchdog Says it is Impossible to Ban Loan Apps

WorldCoin has issued a statement in response to its suspension in Kenya.

In a communique to the Kenyan public, the Ministry of Interior and Administration in Kenya said it was suspending Worldcoin activities in the country as it conducted investigations to ensure the security of the collected information.

Following the government directive, Alex Blania, the CEO and Co-Founder of WorldCoin, declared the temporary suspension of WorldCoin’s verification process in Kenya. This pause comes as the company collaborates with regulatory authorities to tackle the concerns that have been raised, he said on Twitter.

TFH has paused World ID verifications in Kenya as we continue to work with local regulators to address their questions. We apologize to everyone in Kenya for the delay.

World ID is built for privacy. We look forward to resuming operations, while continuing global rollout.

— Alex Blania (@alexblania) August 2, 2023

In a statement WorldCoin responded to the concerns raised by the Ministry of Interior concerning its activities in Kenya. The cryptocurrency’s widespread popularity had led to the formation of long queues of individuals seeking to undergo its verification process.

“We acknowledge the Ministry’s statement and wish to emphasize that security is our top most priority and we understand that the huge crowds over three days at KICC presented a major issue.”

As per the company’s statement, the team is currently developing an onboarding program that incorporates enhanced crowd management protocols. Furthermore, they intend to collaborate with local authorities to enhance awareness of the privacy measures and assurances that WorldCoin enforces, not only within Kenya but across all locations.

“Worldcoin remains committed to providing an inclusive, privacy-preserving, decentralized on-ramp to the global digital economy and looks forward to resuming its services in Kenya while working closely with local regulators and other stakeholders,” it added.

WorldCoin emphasized that it utilizes cutting-edge technology and rigorous security protocols to protect users’ personal data. Additionally, the company has re-affirmed its commitment to maintaining complete adherence to Kenyan laws and regulations, ensuring full compliance and transparency in all its operations within the country.

The company has also expressed its dedication to nurturing productive discussions with local stakeholders aiming to establish a seamless and mutually advantageous collaboration.

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According to the Federal Competition and Consumer Protection Commission of Nigeria (FCCPC), the calls for a complete ban on loan apps by some Nigerians are deemed practically impossible due to the operational nature of these apps.

In a local interview, the Chief Executive Officer of the Commission, Mr. Babatunde Irukera, said, aside from the fact that banning them totally would not solve the current challenges, the internet allows them to operate from anywhere in the world.

“For a business that can evade regulatory interfaces including operating entirely offshore, and possessing the versatility to evolve, rebrand, relaunch, rebirth, or relocate on the internet and needing no physical location, a ban is at best only a pronouncement, and may very well amount to nothing much more than that,” said Irukera.

According to Irukera, despite the recent registration exercise that involved over 180 digital lenders, some of the registered lenders have been found to create new apps to continue their unethical practices. Nonetheless, he noted that any company found guilty of creating new apps to engage in unethical practices will face serious consequences.

In November 2022, Google, which lists many of the loan apps through its PlayStore product, announced that for loan apps in Nigeria, Google requires they have a ‘verifiable approval letter’ from the Federal Competition and Consumer Protection Commission (FCCPC).

Irukera emphasized that completely eliminating loan apps and the potential they offer for financial inclusion and prosperity would result in excluding some of the most vulnerable members of society from accessing commerce and fulfilling critical needs during crucial times.

“The call for outright banning is ill-advised, and in most cases supported by former victims which is understandable, but insufficient for policy-making.”

The CEO of FCCPC highlighted that the registration of loan apps has brought those willing to operate ethically within the regulatory framework. By registering, these lenders demonstrate their commitment to conducting business in a responsible and lawful manner.

Nonetheless, even among the registered players, some are creating alternative channels outside of the Framework to do business.

“As we find those ones, we permanently, without opportunity for renewal or return, remove them from the list allowed to operate.”

The painstaking work of tracking businesses on the internet and holding them accountable is a global phenomenon and challenge that regulators and law enforcers are struggling with internationally.

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