Regulatory Framework for Consumer Credit and Predatory Lending by Microfinance Banks in Ogun State

The proliferation of microfinance banks in peri-urban communities in Ogun State has raised significant concerns about predatory lending practices and inadequate consumer credit regulation. This study evaluates the regulatory framework governing consumer credit advanced by microfinance institutions in Ogun State, South West Nigeria, with a focus on interest rate caps, disclosure obligations, and debt collection practices between 2020 and 2024. Using a socio-legal research design, the study analyses the Central Bank of Nigeria's Microfinance Policy Framework, the Consumer Protection Council Act, and relevant case law from Ogun State courts, supplemented by questionnaire surveys administered to 200 microfinance borrowers in Abeokuta, Sagamu, and Ijebu-Ode. Findings reveal that a majority of borrowers are unaware of their statutory rights, that annual percentage rates are routinely undisclosed, and that aggressive debt recovery practices, including public shaming and seizure of household assets, remain widespread. The study further identifies enforcement weaknesses at the state level that undermine federal regulatory instruments. Recommendations include the mandatory introduction of standardised credit agreements, the establishment of a consumer credit ombudsman office, and enhanced collaboration between the Central Bank of Nigeria and state consumer protection agencies. Keywords: consumer credit, predatory lending, microfinance banks, Ogun State, consumer protection