The Lagos State Government has sanctioned 15 money lending companies for violating operational regulations and engaging in activities considered harmful to residents.
The government said the action was part of ongoing efforts to clean up the money lending sector, protect borrowers from exploitation and ensure that operators comply with laid-down rules.
The Commissioner for Home Affairs, Ibrahim Layode, disclosed this on Friday during the 2026 Ministerial Press Briefing held in Ikeja.
According to him, the affected firms were punished for breaching guidelines regulating money lending activities in the state.
Layode said the government would continue to monitor operators closely and enforce strict compliance to protect Lagos residents from unfair and fraudulent practices.
“The firms were sanctioned to ensure strict adherence to guidelines and to protect Lagosians from sharp practices by financial firms,” the commissioner said.
In recent years, digital loan companies and money lending firms have become increasingly popular in Nigeria as many individuals and small business owners seek quick access to loans outside traditional banks.
However, several operators have also faced accusations of harassment, illegal debt recovery tactics, privacy violations and excessive interest charges.
Many borrowers have complained about loan companies sending threatening messages to family members and contacts, publicly shaming debtors and misusing customers’ personal data.
These complaints have led to increased scrutiny from both state and federal authorities.
Layode acknowledged that despite the problems in the sector, money lenders still play an important role in supporting small businesses and low-income earners who may not easily qualify for bank loans.
According to him, the sector helps petty traders and small-scale business owners access quick funds to support their businesses and daily operations.
“Moneylending business is one of the vital parts of the economy which allows people in the small-scale industry and petty traders to have stress-free access to quick loans to finance their businesses,” he said.
He explained that many small business operators struggle to obtain loans from commercial banks because of strict conditions such as collateral requirements, lengthy processing procedures and high financial demands.
As a result, many residents rely on licensed money lenders for short-term financial support.
The commissioner said the Ministry of Home Affairs is responsible for regulating money lending operations in Lagos State.
According to him, the ministry handles the processing of applications, issuance of licences and renewal of permits for operators in the industry.
He added that the ministry also monitors the activities of licensed firms to ensure that they comply with state regulations and maintain professional standards.
Layode revealed that the government regularly organises stakeholder meetings and training programmes for money lenders to educate them on global best practices and ethical business conduct.
“We also conduct stakeholders’ forums for moneylender operators in order to bring them up to speed on the latest world best practices,” he said.
The commissioner noted that the Lagos State Government is working closely with federal agencies to strengthen regulation within the sector.
He said the ministry collaborates with the Federal Competition and Consumer Protection Commission (FCCPC) and the Special Control Unit Against Money Laundering (SCUML) to improve oversight and ensure compliance with financial regulations.
The FCCPC has in recent years intensified actions against illegal digital lenders accused of violating consumer rights.
The commission previously raided several loan companies over allegations of data breaches, intimidation of borrowers and unethical debt recovery methods.
Some digital loan applications were also removed from online app stores after investigations into their operations.
Layode said the Lagos State Government profiles and monitors licensed operators to ensure they are financially stable and properly registered before they are allowed to operate.
According to him, this process is aimed at protecting the public from fraudulent individuals posing as financial service providers.
“In addition, the Ministry registers, profiles and monitors the viability of such companies with a view to ensuring that while the money lenders are in business, the general public is also protected from being scammed by fraudulent people of questionable characters,” he stated.
The commissioner stressed that licensed money lenders have continued to contribute to the growth of micro and small-scale businesses across Lagos State.
He said the availability of alternative funding outside traditional banks has helped many traders survive harsh economic conditions.
“This partnership has greatly assisted small-scale business owners in Lagos to keep their petty businesses afloat without having to contend with high interest rates and clauses of the big commercial banks,” Layode said.
Nigeria’s economic challenges, including inflation, rising food prices and limited access to credit, have increased demand for quick loans among many households and business owners.
As commercial banks tighten lending conditions, many people now depend on digital loan platforms and private money lenders for emergency financial support.
Consumer protection advocates have also called for stricter monitoring of the industry to prevent exploitation of vulnerable Nigerians.
Layode disclosed that between 2025 and 2026, the Lagos State Ministry of Home Affairs received 112 fresh applications from money lending companies seeking operational licences.
He added that 214 existing licences were renewed during the same period, showing the continued growth of the industry in Lagos.
The commissioner said the government would not stop legitimate businesses from operating but would continue to take action against any operator found violating the law.
He stressed that maintaining public confidence in the financial sector remains a priority for the state government.
For many Lagos residents, the government’s action is expected to bring some relief, especially for borrowers who have experienced harassment or unfair treatment from some loan companies.