Legal

Lending money in Nigeria without the licence or registration your business model requires carries real consequences. The Federal Competition and Consumer Protection Commission can impose fines of up to ₦100 million, or one percent of annual turnover, whichever is higher, on unlicensed operators. If you intend to lend as a business in Nigeria, establishing which licence applies to you is not a formality. It is the first decision your business needs to get right.

1. Why licensing exists

Nigeria regulates lending through three principal authorities: the Central Bank of Nigeria, State Governments, and the Federal Competition and Consumer Protection Commission. Each exists to protect borrowers from predatory terms and to preserve confidence in the wider financial system. The Commission has described its own digital lending framework as a deterrent to predatory digital lenders. Licensing is not an obstacle placed between you and your customers. It is the mechanism that allows a lending business to be trusted by the customers, partners, and investors it needs in order to grow.

2. The four licences that matter in Nigeria

Which licence applies to you depends on what your business actually does.

Moneylenders Licence. Issued by State Governments rather than the Central Bank. Lagos State, for example, administers its own. This licence permits lending at interest only. It does not permit accepting deposits or offering other financial services.

Microfinance Bank Licence. Issued by the Central Bank of Nigeria, across four tiers determined by capital and scale:

• Tier 1 Unit: a minimum capital of ₦200 million
• Tier 2 Unit: a minimum capital of ₦50 million
• State Microfinance Bank: a minimum capital of ₦1 billion
• National Microfinance Bank: a minimum capital of ₦5 billion

A Microfinance Bank may accept deposits and provide savings, credit, and related services, but may not conduct foreign currency transactions or international transfers.

Finance Company Licence. Also issued by the Central Bank of Nigeria, with a minimum capital requirement of ₦100 million. A Finance Company may provide consumer loans, asset financing, and factoring, but may not accept customer deposits.

Commercial Bank Licence. The most extensive authorisation available, issued by the Central Bank of Nigeria. It permits deposit-taking, lending, and the full range of retail banking services, and carries correspondingly higher capital and governance requirements than any of the licences above.

3. Digital lending: the FCCPC and the DEON Regulations 2025

None of the licences described above, on their own, authorise lending through a website or mobile application. Since 2022, the Federal Competition and Consumer Protection Commission has required digital lenders to register separately, in addition to whichever base licence applies to their business.

This requirement was substantially expanded by the Digital, Electronic, Online or Non-Traditional Consumer Lending Regulations 2025, commonly known as the DEON Regulations, which took effect on 3 September 2025. The DEON Regulations extend the Commission's oversight to any digital platform that advances value to consumers, including cash, airtime, data, or comparable benefits, and require registered lenders to appear on the Commission's public register. They also require compliance with the Nigeria Data Protection Act 2023, including maintaining a published Privacy Policy and Terms of Use, which this page and its companions are intended to satisfy.

Enforcement of certain provisions of the DEON Regulations is presently the subject of ongoing legal proceedings, following an interim injunction obtained in April 2026. We recommend confirming the current state of enforcement with the Commission or with counsel before relying on this section as a complete statement of your obligations.

4. Digital lending is not bound by state lines

A distinction worth understanding. A State moneylenders licence confines your physical office to that State. A Lagos moneylenders licence requires your office to be located in Lagos.

That restriction applies to physical presence, not to where you may lend. If you lend through a website or mobile application, that boundary no longer applies. A single State-issued licence can support customers across Nigeria, provided you are not operating physical branches outside the State in which you are licensed.

5. Cooperative societies: a members-only path

Registered cooperative societies, formed under the applicable cooperative legislation and registered with State Governments or the Federal Department of Cooperatives, may lend to their members without holding any of the licences described above. A cooperative may accept contributions from its members and extend loans from those pooled funds.

The material limitation is that a cooperative may lend only to its own members. It is not a route to lending to the general public, and a business seeking to serve customers beyond a defined membership should not treat cooperative registration as a substitute for a Moneylenders, Microfinance Bank, Finance Company, or Commercial Bank licence.

6. Offering credit without becoming a lender

Not every business that wants to offer credit needs a licence at all. If your objective is to let customers pay in instalments at checkout, whether through Buy Now, Pay Later or another embedded credit model, you may achieve this by partnering with an already-licensed lender who underwrites the credit.

Under this structure, the licensed partner conducts the credit assessment, funds the purchase, and bears the risk of default. Your platform manages the customer experience. This allows a business to offer credit to its customers without itself becoming a licensed lender, provided the underwriting partner holds the appropriate licence.

7. Asset management is a separate authorisation

An asset management or fund manager licence, issued by the Securities and Exchange Commission, authorises a business to manage investments on behalf of others. It does not authorise lending, and should not be confused with any of the licences described above. Some lending businesses pursue an asset management licence in addition to their lending licence, as a separate line of business, but it is not an alternative route to lending in its own right.

8. Where Lendsqr fits in

Whichever licence applies to your business, whether Moneylender, Microfinance Bank, Finance Company, or Commercial Bank, Lendsqr's lending-as-a-service platform is built to operate within the Nigerian regulatory framework. This includes the KYC and AML tooling your licence requires, the reporting your regulator expects, and the Privacy Policy and Terms of Use every digital lender must maintain under the DEON Regulations. Securing your licence is your responsibility. We are responsible for the technology that keeps you compliant once you have it.

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9. Still not sure which licence applies to you?

Licensing in Nigeria depends on the particular model your business follows, and an incorrect assumption can be costly to correct. If you are uncertain which licence applies to you, speak with our team. We have advised lenders across Nigeria on precisely this question.