Title: Digital lending in emerging economies: the nexus between financial innovation and consumer protection

Authors: Mark Y. Tampuri

Addresses: Academic City University College, Property # 279-302, Agbogba, Haatso, P.O. Box AD 421, Accra, Ghana

Abstract: This study examines unregulated digital lending practices in Ghana, Nigeria, South Africa, and Kenya, and their impact on consumers. A triangulation approach was used, combining primary research in analysing 68 unlicensed digital lending apps and surveying 280 consumers and secondary research in reviewing academic and industry literature. Findings indicate that while digital credit improves access to finance, unlicensed instant digital lending firms pose risks such as high-interest rates, debt collector harassment, and over-indebtedness. Additionally, these apps sell or expose user data without consent, leading to manipulative loan advertisements by third parties. Although central banks have implemented some consumer protection measures, regulatory gaps remain. The study recommends that central banks strengthen regulations, collaborate with app distribution platforms to remove unlicensed apps, hold unregulated lenders accountable, and promote consumer education on responsible borrowing.

Keywords: consumer protection; digital finance; alternative finance; financial inclusion; predatory lending.

DOI: 10.1504/AJFA.2023.134713

American Journal of Finance and Accounting, 2023 Vol.7 No.2, pp.145 - 168

Received: 11 Jul 2023
Accepted: 02 Sep 2023
Published online: 07 Nov 2023 *