A money lending licence in Lagos and Abuja allows a company that is not a bank or other CBN-licensed institution to lend money to the public lawfully. Lending without one is an offence under the moneylenders laws, and a loan made by an unlicensed moneylender can be unenforceable in court, so the lender may be unable to recover the money it has lent.
This guide explains who needs a moneylender's licence, how it compares with a CBN licence, and the step-by-step procedure, documents, fees and renewal rules in Lagos State and the Federal Capital Territory (FCT). It also explains what digital lenders and loan apps must do after obtaining their licence, including registration with the Federal Competition and Consumer Protection Commission (FCCPC).
Who needs a money lending licence in Lagos and Abuja?
The moneylenders laws apply to any person or company whose business is lending money, whether the loans are made from an office, through agents or through a mobile app. A business that lends regularly to the public, charges interest and advertises loans is presumed to be carrying on the business of money lending.
The laws do not apply to institutions that are already licensed to lend under another law, including:
- banks, microfinance banks and finance companies licensed by the Central Bank of Nigeria (CBN)
- primary mortgage banks and other CBN-regulated lenders, within the limits of their licences
- cooperative societies lending to their members, and insurance companies within their licences
- employers lending to their employees
Every other lender, including a digital lender that has no CBN licence, needs a moneylender's licence in the state where it carries on business.
Money lending licence or CBN licence?
There are two routes into the lending business in Nigeria.
| State money lending licence | CBN finance company licence | CBN microfinance bank licence | |
|---|---|---|---|
| Regulator | State Magistrate's Court and, in Lagos, the Ministry of Home Affairs | Central Bank of Nigeria | Central Bank of Nigeria |
| Where you can operate | The state that issued the licence | Nationwide | Nationwide or one state, depending on the category |
| Deposits | Not allowed | Not allowed | Allowed |
| Minimum capital | No statutory minimum; Lagos applicants are generally expected to have share capital of about ₦20 million | ₦100 million under the guidelines in force for some time | Depends on the category |
| Time and cost | Weeks, at modest cost | Several months, with higher costs and ongoing CBN supervision | Several months, with the highest costs and closest supervision |
A state licence is the fastest and cheapest way to start lending, and it suits most loan apps and small lenders. A lender that wants to lend in many states with a single licence, raise more capital or take deposits should consider a finance company licence or a microfinance bank licence.
Do digital lenders and loan apps need a money lending licence?
Yes, unless they hold a CBN licence. A loan app lends money to the public just as a physical lender does. In practice, a digital lender obtains a moneylender's licence in the state where it has its office and operations, usually Lagos or Abuja. It does not usually need a separate licence in every state where its customers live.
A digital lender also needs FCCPC registration before it can lend through an app, website or other digital channel, and the FCCPC asks for the lender's licence as part of the application. Our guide on the digital lending licence in Nigeria explains the FCCPC process.
Money lending licence in Lagos
The law
Money lending in Lagos is governed by the Moneylenders Law of Lagos State, which prohibits anyone from carrying on the business of money lending in the state without a licence. Licences are granted to companies rather than individuals, and are issued by the Lagos State Ministry of Home Affairs after the applicant has obtained a moneylender's certificate from a Magistrate.
Step 1: Incorporate a company
The applicant must be a company incorporated with the Corporate Affairs Commission (CAC), with at least two directors. The objects of the company should include money lending. Applicants are generally expected to have a share capital of about ₦20 million, and a higher amount may be expected where a foreign national is a director or shareholder. Our guide to the cost of company registration in Nigeria explains the CAC fees and stamp duty for different levels of share capital.
Step 2: Prepare the documents
The Lagos application requires:
- the company's CAC documents: certificate of incorporation, memorandum and articles of association, and the status report showing its directors and shareholders
- tax clearance certificates for the company and at least two directors, covering the last three years, or proof of tax registration for a new company
- police clearance reports for the directors
- a reference letter from the company's bank
- evidence of the business premises, such as a lease or title document and a recent utility bill
- an affidavit confirming that the company is not in debt and that the bank account it has provided belongs to it
- identification and passport photographs of the directors
Step 3: Obtain the Magistrate's certificate
The company applies to the Chief Magistrate of the magisterial district where its business premises are located. If the application is approved, the Magistrate issues a moneylender's certificate in Form B and a letter recommending the company to the Ministry of Home Affairs for a licence.
Step 4: Apply to the Ministry of Home Affairs
The company then submits its application to the Lagos State Ministry of Home Affairs, with the Form B certificate, the documents listed above and evidence of payment of the prescribed fees. At the time of writing, the fees reported are ₦25,000 for the application form and ₦200,000 for the licence, but the Ministry should be asked for the current amounts before payment.
Step 5: Inspection and grant
Officials of the Ministry inspect the company's business premises. If they are satisfied that the company is fit and proper and has complied with the law, the Ministry issues the money lending licence.
Validity and renewal in Lagos
A Lagos money lending licence is valid for one year and must be renewed every year. To renew, the company obtains a fresh Form B certificate from the Magistrate, updates its tax and police clearance, and applies to the Ministry with the renewal fee. The Ministry may inspect the premises again before renewing the licence.
Money lending licence in Abuja
The law
In the FCT, money lending is regulated under the moneylenders legislation that applies in the territory, under which a lender needs both a moneylender's certificate and a moneylender's licence. The process is handled by the Chief Magistrate Court in the FCT. Unlike Lagos, there is no separate application to a ministry.
Step 1: Incorporate a company
As in Lagos, the applicant should be a company incorporated with the CAC, with directors and shareholders who can each provide valid identification.
Step 2: Prepare the documents
The Abuja application requires:
- an application letter on the company's letterhead, sealed with the company seal and addressed to the Chief Magistrate, stating that the company intends to carry on business as a moneylender
- certified copies of the company's CAC documents: certificate of incorporation, memorandum and articles of association, and particulars of directors and shareholders
- tax clearance certificates for the company and its directors, or proof of tax registration for a new company
- police character certificates for the directors, which may involve fingerprint verification
- evidence of an operational corporate bank account with a licensed Nigerian bank, and a bank reference letter
- an affidavit confirming that the company is not in debt and that its bank account details are genuine
- evidence of payment of the prescribed fees
Step 3: Submit to the Chief Magistrate Court
The application and documents are filed at the Chief Magistrate Court in the FCT, where the application is assigned to a Magistrate for review. The court may inspect the company's premises or ask for further information.
Step 4: Certificate and licence
If the Magistrate approves the application, the court issues the moneylender's certificate and licence.
Validity and renewal in Abuja
The Abuja licence is valid for one year. To renew, the company resubmits updated documents, including fresh tax clearance certificates, and pays the renewal fee. The court may review the company's operations or inspect its premises before renewing.
How long does it take to get a money lending licence in Lagos and Abuja?
Once the company is incorporated and its documents are ready, a money lending licence in Lagos and Abuja usually takes a few weeks to obtain. The main causes of delay are police clearance reports, tax clearance certificates and the inspection of premises, so applicants should start gathering these documents early.
Costs of a money lending licence
The total cost of a money lending licence in Lagos and Abuja covers:
- company registration with the CAC, which depends mainly on the share capital
- the Magistrate's Court and licence fees in Lagos or the FCT
- the cost of obtaining tax clearance, police reports and affidavits
- professional fees for preparing and following up the application
Digital lenders should also budget for FCCPC registration and a data protection compliance audit.
What a licensed money lender must do
A licence is not the end of compliance. A licensed lender should:
- put every loan in writing, setting out the amount, interest, charges and repayment terms, and give the borrower a copy
- disclose the full cost of the loan clearly before the borrower commits
- recover debts lawfully, without threats, harassment or public shaming, and through the courts where necessary; our guide on how to recover a debt in Nigeria explains the lawful options
- keep proper records of loans, repayments and defaults
- protect borrowers' data under the Nigeria Data Protection Act 2023
- register for tax with the Nigeria Revenue Service and the state tax authority, and file returns
- renew the licence every year, as a lapsed licence can affect the lender's right to enforce its loans
Common mistakes
- Lending before the licence is issued, which can make the loans unenforceable
- Registering a company whose objects do not include money lending
- Using a virtual office that fails the premises inspection
- Letting the licence lapse because the annual renewal was missed
- Assuming a state licence is enough for a loan app, without FCCPC registration
- Using recovery agents who harass borrowers, which exposes the lender to FCCPC sanctions and claims for damages
Frequently asked questions
Can an individual get a money lending licence in Lagos?
In practice, licences are granted to companies registered with the CAC rather than to individuals.
Is a Lagos money lending licence valid in other states?
No. A moneylender's licence only covers the state that issued it. A lender with offices in several states needs a licence in each, or a CBN licence that covers the whole country.
Can a licensed money lender take deposits?
No. Only CBN-licensed deposit-taking institutions, such as banks and microfinance banks, can accept deposits from the public.
Can a foreign-owned company get a money lending licence?
Yes. A Nigerian company with foreign shareholders can apply, but it should also register with the Nigerian Investment Promotion Commission and may be expected to have a higher share capital.
What happens if I lend without a licence?
Carrying on money lending without a licence is an offence, and the courts may refuse to enforce the loans, leaving the lender unable to recover the money.
How our lawyers can help
Our fintech and lending lawyers incorporate lending companies, prepare and file applications for a money lending licence in Lagos and Abuja, obtain the Magistrate's certificate, manage renewals and register digital lenders with the FCCPC. We also draft loan agreements and lawful recovery procedures. Find out more about our banking and finance lawyers, or read more digital lending guides.
To start your lending business, contact us.
