Banking
SERAP Rejects Banks’ Request for Social Media Handles for KYC
By Adedapo Adesanya
The Socio-Economic Rights and Accountability Project (SERAP) has urged Mr Folashodun Shonubi, the acting Governor of the Central Bank of Nigeria (CBN), to remove the request for customers’ social media handles for know your customer (KYC) by banks.
SERAP also urged him to “withdraw the Circular number FPR/DIR/PUB/CIR/007/076 of 20 June 2023 mandating banks and other financial institutions to implement and comply with the mandatory unlawful provisions on customers’ social media handles in the CBN Regulations.”
According to Section 6(a)(iv) of the CBN Regulations, banks and other financial institutions “shall identify their customer and obtain information on the social media handle of the customer.” Section 6(b)(iii) contains a similar provision.
In the letter dated June 24, 2023, and signed by SERAP deputy director, Mr Kolawole Oluwadare, the organisation said: “The CBN Regulations and directive to banks to obtain details of customers’ social media address violate Nigerians’ rights to freedom of expression and privacy. It is inconsistent and incompatible with the rule of law.”
SERAP said, “The CBN ought to contribute to the advancement of respect for the rule of law and human rights in the discharge of its statutory functions and not undermine or violate these fundamental legal requirements and standards.”
According to SERAP, “The purported mandatory requirement would inhibit Nigerians from freely exercising their human rights online. If obtained, such information may also be misused for political and other unlawful purposes.”
The letter read in part: “We would be grateful if the recommended measures are taken within 3 days of the receipt and/or publication of this letter. If we have not heard from you by then, SERAP shall take all appropriate legal actions to compel you and the CBN to comply with our request in the public interest.
“The mandatory requirement of social media handles or addresses of customers does not serve any legitimate aim. Such information may be used to unjustifiably or arbitrarily to restrict the rights to freedom of expression and privacy.
“SERAP is gravely concerned that the CBN Regulations and directive to banks and other financial institutions would impermissibly restrict the constitutional and international rights to freedom of expression, privacy and victims’ right to justice and effective remedies.
“Requiring social media handles or addresses of customers as a means of identification would have a disproportionate chilling effect on the effective enjoyment by Nigerians of their rights to freedom of expression and privacy online.
“The CBN bears the burden of justifying any restriction on people’s freedom of expression and privacy. Under the Nigerian Constitution 1999 [as amended] and human rights treaties to which the country is a state party, any restrictions on these rights must be applied strictly so that the rights are not put in jeopardy.
“There are other means of identification such as passport, driver’s licence, Bank Verification Number (BVN), and Tax Identification Number (TIN), which banks and other financial institutions already require their customers to provide.
“The additional requirement of obtaining details of a customer’s social media handle or address fails to meet the requirements of legality, necessity, and proportionality.
“The requirement of necessity implies an assessment of the proportionality of the grounds, with the aim of ensuring that the excuse of ‘regulations on customer due diligence’ is not used as a pretext to unduly intrude upon the rights to freedom of expression and privacy.
“The CBN Regulation does not demonstrate how the use of social media handle or address as a means of identification would serve to improve banks and other financial institutions’ ability to implement and comply with the laws and regulations relating to customer due diligence.
“The Directive by the CBN, which does not in any event carry the force of law, also fails to provide any explanation as to how social media handles or addresses can facilitate compliance with regulations relating to customer due diligence.
“Obtaining the details of customers’ social media handles or addresses would unduly interfere with the rights to freedom of expression and privacy. It would also be disproportionate to any purported legitimate aim that the CBN seeks to achieve.
“The facts that there are sufficient means of identification for CBN, banks and other financial institutions to rely on to meet the requirement of Know Your Customer also heighten concerns of overreach, and confer far-reaching discretion on banks and financial institutions.
“Obtaining information on customers’ social media handles or addresses as means of identification is therefore more intrusive than necessary.
“The cumulative effect of any attempt to access details of customers’ social media handles or addresses would be to undermine the letter, substance and spirit of the rights to freedom of expression and privacy of Nigerians.
“The effective enjoyment of these fundamental rights constitutes a fundamental pillar for building a democratic society and strengthening democracy.
“The CBN fails to show how details of customers’ social media handles or addresses would assist banks and other financial institutions to effectively implement and comply with the laws and regulations relating to customer due diligence.
“Human rights, the rule of law and democracy are interlinked and mutually reinforcing and central to the universal and indivisible core values and principles of the United Nations, the African Union and the Economic Community of West African States to which Nigeria belongs.
“The CBN is bound to respect the constitutional and international human rights of Nigerians including the rights to freedom of expression and privacy.
“Under the principle of pacta sunt servanda and general principles governing the law of treaties, the CBN is also bound to uphold and apply in the discharge of its statutory functions the human rights treaties to which Nigeria is a state party.
“Indeed, under international human rights law, all public or governmental institutions including the CBN are in a position to engage the responsibility of the state.
“The positive obligations on Nigeria to ensure the rights to freedom of expression and privacy will only be fully discharged if individuals are protected against violations by institutions like the CBN.
“The Nigerian Constitution guarantees in Section 39 the right to freedom of expression and in Section 37, the right to privacy.
“Article 19 of the International Covenant on Civil and Political Rights and Article 9 of the African Charter on Human and Peoples’ Rights also guarantee the right to freedom of expression. Article 17 of the Covenant also guarantees the right to privacy.
“Freedom of expression and opinion are indispensable conditions for the advancement of any person or society, as the free exercise of the right facilitates the evolution and exchange of opinions, in turn enabling principles of transparency and accountability crucial for the promotion and protection of human rights.
“While under certain narrow circumstances, a State may restrict the right to freedom of expression, any such restrictions must be strictly limited and meet the conditions of legality (i.e. be “provided by law”), legitimate purpose, necessity, and proportionality. The CBN Regulations mandating social media handle or address as a form of identification for customers fail to meet these legal requirements.
“In particular, Article 19(1) of the Covenant establishes the right to freedom of opinion without interference. Article 19(2) establishes Nigeria’s obligations to respect and ensure ‘the right to freedom of expression,’ which includes the freedom to seek, receive and impart information and ideas of all kinds, regardless of frontiers.
“Under article 19(3), restrictions on the right to freedom of expression must be ‘provided by law’, and necessary ‘for respect of the rights or reputations of others’ or ‘for the protection of national security or of public order (ordre public), or of public health and morals.
“The principles of legality, necessity, and proportionality, apply to the right to privacy in the same manner as they do to freedom of expression and other fundamental freedoms.
“Restrictions to the rights to freedom of expression and privacy that do not comply with the elements of legality, legitimate purpose, and necessity and proportionality shall be deemed unlawful.”
Needing money fast is a common problem in Nigeria. Rent is due, or a small business runs short on stock money before the next sale. In the past, getting a loan from a bank meant paperwork, a guarantor, and sometimes property as collateral. That process could take weeks. Today, things have changed. Several licensed digital lenders in Nigeria now offer personal loans without collateral, and the entire process can be completed from a phone in under an hour.
This article explains how no collateral loans work in Nigeria, what lenders actually check before approving you, and how to avoid the mistakes that get loan applications rejected or, worse, land borrowers with apps that are not properly registered.
What “No Collateral” Really Means
A collateral loan asks you to pledge something of value, like land, a car, or a fixed deposit, as security. If you fail to repay, the lender has a legal right to seize that asset. Most working Nigerians do not have assets like this sitting idle, which is exactly why no collateral loans exist.
Instead of asking for property, digital lenders look at other signals to judge whether you can repay:
- Your Bank Verification Number (BVN) or National Identification Number (NIN), used to confirm your identity
- Your bank account history, which shows whether money moves in and out regularly
- Your mobile money or airtime usage in some cases, which hints at your financial activity
- Your repayment history with other lenders, if you have borrowed digitally before
This is why an app like LendSafe can approve a loan in minutes. There is no waiting for a bank manager to review your file. The decision is based on data you provide once, during registration.
Steps to Get a Quick Loan Without Collateral
The process is fairly similar across most reputable Nigerian loan apps, though the details differ slightly.
- Download a licensed loan app: Always check that the app is registered with the Federal Competition and Consumer Protection Commission (FCCPC) before installing it. Unregistered apps are the ones most often linked to harassment and hidden charges.
- Register with your phone number and basic details: Most apps ask for your name, phone number, and BVN or NIN to verify who you are.
- Answer a few simple questions: This usually covers your employment status, income range, and sometimes your address.
- Wait for your credit limit: Based on the information provided, the app calculates how much you qualify to borrow. This step typically takes a few minutes.
- Choose your loan amount and repayment plan: Pick an amount you are confident you can repay on time, not the maximum offered.
- Receive the funds: Once approved, money is sent directly to your bank account, often within minutes.
What to Check Before You Borrow
Before accepting any loan offer, confirm the following:
- The interest rate and total repayment amount: A lender should show you exactly how much you will repay, not just how much you will receive.
- The repayment date and any penalty for late payment: Missing a date by accident should not lead to extreme charges.
- The lender’s registration status: Reputable lenders, such as those operating under the FCCPC’s Digital, Electronic, Online and Non-Traditional Consumer Lending Regulations, are required to disclose their licensing details. If an app cannot show this, treat it as a warning sign.
- What permissions the app is requesting: A lender does not need access to your entire photo gallery or contact list to process a personal loan. Be cautious of apps that ask for more access than necessary.
Why ‘No Collateral’ Does Not Mean No Responsibility
Some borrowers assume that because no asset is on the line, a missed payment carries no real consequence. This is not true. Digital lenders report repayment behaviour to credit bureaus in Nigeria, including CRC Credit Bureau and CreditRegistry. A pattern of late or missed payments can affect your ability to borrow in the future, even from a different lender entirely.
The safest approach is to borrow only what you need and only when you are sure of your repayment date. A loan app should support a short-term need, not become a constant source of stress.
Conclusion
No collateral loans have made it possible for ordinary Nigerians, salaried or self-employed, to access quick cash without the long process traditional banks require. The key is choosing a lender that is properly licensed, transparent about costs, and respectful of your data and privacy. Apps that are upfront about their fees and regulatory status, like LendSafe by SmartLoans, are generally a safer place to start than apps with no clear company information behind them.
Before your next financial emergency arrives, it is worth knowing which licensed apps you can trust and how the no-collateral process actually works. That knowledge alone can save you from a costly mistake.
By Adedapo Adesanya
African payments technology giant, Paystack, has launched the Paystack Small Business Programme to support Nigerian small businesses through a range of initiatives designed to help them grow, connect with relevant opportunities, and access funding for their next stage of growth.
The initiative will support businesses as they start, manage and grow their operations, starting with the Paystack Small Business Bundle.
The bundle gives eligible Nigerian merchants access to up to N4 million in discounts on tools and services from selected partners across key areas of business operations, including commerce, bookkeeping, logistics, design, workspace, customer communication, and digital tools.
In the pilot phase, Paystack is targeting 2,000 Nigerian SMBs for the Small Business Bundle, with additional partner offers expected over time.
According to the company, in a statement on Monday, small businesses play a significant role in Nigeria’s economy, but many still face everyday operational challenges, from managing sales and records, reaching customers, handling deliveries, and accessing affordable tools.
As a result, the programme has been developed to provide practical support for these businesses as they manage daily operations and plan for their next stage of growth. Through the Small Business bundle, eligible merchants can access offers from partners including Bumpa, Ijeworks, Wiicreate, Flowcart, Simplebks, Africaworks, Paystack, Kindlybook, FezDelivery, Gamp, Pressone, Mercurie, Shuttlers and Canva.
The Paystack Small Business Programme will commence with three key initiatives designed to support the growth and sustainability of small businesses. These include the Paystack Small Business Bundle, which offers a range of tools, services, resources, and partner benefits to help businesses operate more efficiently and scale sustainably; the Paystack Small Business Launchpad, which provides dedicated, hands-on support to high-potential businesses, enabling them to maximize the value of Paystack’s solutions and accelerate growth; and the Paystack Small Business Grant, which offers financial support to promising businesses to help fund their next phase of expansion and development.
The Bundle is available to eligible Nigerian merchants with a live Paystack account, at least 10 Paystack transactions in the last 30 days, and operations in Nigeria.
Eligible merchants can visit the Small Business Bundle Page to browse available partner offers, submit their business details and receive redemption instructions once their eligibility has been confirmed.
By Seun Oyediran
The Nigerian economic landscape is defined by the resilience of its micro, small, and medium-sized enterprises (SMEs). From the high-traffic supermarkets of Lagos to the critical distribution hubs supporting the hinterlands, millions of entrepreneurs drive our domestic commerce. Yet, a recurring theme persists in our boardroom discussions and macroeconomic reviews: the “missing middle.” While demand remains robust across various sectors, limited access to financing remains one of the several constraints affecting SME growth, effectively putting a limit on how much the country’s economy can grow.
The data provided by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) is unequivocal. SMEs constitute approximately 96% of all domestic businesses, contributing nearly 50% of the national GDP and employing over 80% of the workforce. They are not merely a segment of the economy; they are the economy. However, the International Finance Corporation (IFC) continues to highlight a staggering credit gap. This structural bottleneck means that even businesses with proven product-market fit are often unable to fulfill orders, optimize inventory, or expand their footprint, simply because traditional capital remains inaccessible.
Merchant credit represents one financing option available to support working capital and inventory management needs. Unlike the rigid structures of traditional commercial lending, merchant credit is purpose-built for the velocity of trade. By injecting capital directly at the point of need, specifically for inventory replenishment, business expansion and equipment acquisition, it may help address short-term liquidity requirements for eligible businesses. For a merchant, the inability to stock goods is not just a missed sale; it is a loss of market share and a regression in cash flow momentum. Merchant credit may help eligible businesses address short-term liquidity constraints and support inventory management.
From a risk management and credit perspective, the evolution of digital financial services has revolutionised how we view SME creditworthiness. Historically, the absence of collateral or formal credit histories led to the systemic exclusion of many viable businesses. A data-driven approach shifts the focus from static assets to dynamic performance, enabling lenders to deploy capital into businesses demonstrating sustainable operational performance.
The macroeconomic implications of optimising merchant credit are profound. Access to appropriately structured financing may contribute to broader economic activity, employment, and business expansion. In the context of Nigeria’s urgent need to diversify away from hydrocarbon dependence, the private sector, and SMEs in particular, must remain an important contributor to economic development. To build globally competitive brands and export-led enterprises, we must move beyond the rhetoric of “supporting” small businesses and transition toward integrating them into modern credit value chains.
The strategic imperative is clear. The chasm between a local business and a regional champion is rarely a lack of ambition; it is access to capital that remains a significant constraint for many businesses. If we are to foster a new generation of African industry leaders, we must prioritise the deployment of flexible, data-driven financing solutions. When responsibly structured and appropriately deployed, merchant credit can support business growth, inventory management, and operational continuity for eligible enterprises.
Seun Oyediran, Director, Merchant Lending
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