In Lagos, lending naira to a relative now and then is free of formalities, but any regular business of lending at interest requires a Lagos State licence, and most loan offers received by message are attempts at fraud.
Lagos, megacity of informal credit
With the Balogun and Oshodi markets, the Yaba tech hub and the offices of Victoria Island, Lagos gathers traders, employees and entrepreneurs. Loans between relatives there often pay for stock, a year of rent paid upfront or school fees.
The Lagos State Money Lenders Law
The Lagos law requires a licence from anyone who lends money at interest as a regular activity, except banks, cooperatives, insurers and licensed pawnbrokers. The application notably requires a character certificate obtained before a magistrate and an inspection of the premises.
A licence renewed every year
A Lagos money lender's licence is valid for one year only. Asking a private lender for the current licence and for the Corporate Affairs Commission registration number weeds out many fictitious intermediaries operating from nothing more than a WhatsApp number.
Loan apps and the DEON regulations
Lagos hosts most Nigerian fintechs. Since the 2025 DEON regulations, every digital loan app must be registered with the FCCPC, the federal consumer protection commission, which penalises humiliating debt collection and defamatory messages sent to Lagos borrowers' contacts.
Ajo and esusu in the Lagos markets
In Lagos markets, ajo remains a daily savings tool: a collector comes round to gather traders' contributions. The system rests entirely on trust, and a collector who vanishes with the cash leaves members with almost no practical way to recover it.
Put the loan in writing, even within a family
An IOU signed before witnesses is worth more than a spoken promise made in Surulere or Ikorodu. Our page on drafting a loan agreement details the useful clauses: amount in naira, due dates, any interest and dispute resolution.
Mediation in Lagos: CMC and the Multi-Door Courthouse
If a debt goes unpaid, the Citizens' Mediation Centre attached to the Lagos Ministry of Justice offers free mediation, and the Lagos Multi-Door Courthouse steers parties towards conciliation or arbitration. These routes often avoid lengthy court proceedings.
LASCOPA and consumer protection
The Lagos State Consumer Protection Agency takes complaints about unfair commercial practices. For a dispute with a loan app, the FCCPC remains the federal contact, but the state agency can point Lagos residents towards the right department.
Fake investors and fake offices
A fake lender may arrange a meeting in a Lekki hotel or a rented office in Ikeja to look credible, then demand processing fees before any payout. Our page on loan scams on social media describes these scenarios.
Annual rent and short-term loans
In Lagos, landlords often demand one or two years of rent in advance, which pushes many tenants to borrow from relatives. Setting a realistic schedule tied to the monthly salary stops a family loan from turning into a quarrel.
Tax: the role of LIRS
Personal income tax for Lagos residents falls under the Lagos State Internal Revenue Service. Interest received on a private loan may be taxable, so ask LIRS or a tax adviser before setting a rate, and keep your supporting records.
Beyond Lagos
Rules change from state to state: a lender licensed in Lagos is not necessarily authorised elsewhere. For an overview, read our guide to peer-to-peer loans in Nigeria, or compare with Ibadan, in neighbouring Oyo State.
Securing a private loan in Lagos in six steps
- Ask a professional lender for a valid Lagos State licence and check the company with the Corporate Affairs Commission.
- For an app, confirm that it appears on the FCCPC list of registered digital lenders before installing it.
- Draft an IOU stating amount, term, any rate and due dates, signed by both parties and two witnesses.
- Transfer the funds by bank transfer from an account in your name, with the word loan in the reference.
- Keep a record of every repayment received, with the date, amount and transaction reference.
- In case of disagreement, approach the Lagos Citizens' Mediation Centre before taking legal action.
What a peer-to-peer loan costs in Lagos
| Item | Order of magnitude | Good to know |
|---|---|---|
| Rate between relatives | Free to agree, often zero | No national usury rate; stay reasonable |
| Annual money lender licence | ₦200,000 (indicative) | Plus a ₦25,000 filing fee, to be confirmed with Lagos State |
| Mediation at the CMC | Free | Lagos State public service |
| Drafting by a lawyer | Variable | Fees to agree in writing |
| Fees demanded by a scammer | Total loss | Sure sign of fraud |
Documents to prepare in Lagos
- Valid NIN card or passport
- Proof of Lagos address, such as an electricity bill
- Payslips or bank statements for the last three months
- IOU signed before witnesses
- Proof of the initial transfer
- The lender's licence if it is a professional
Common traps in Lagos
- Entrusting your savings to an unknown ajo collector without checking how long they have worked the market or who recommends them.
- Paying processing fees to a lender met on Instagram who promises same-day release of funds without any checks.
- Letting an app access your contact list, which later exposes colleagues and relatives to collection messages.
- Lending a year's rent with nothing in writing, then holding no proof when the tenant moves out of Lagos.
- Believing a fake CBN agent who demands a release tax: the central bank never lends to private individuals.
Common questions on private loans in Lagos
Do I need a licence to lend money to a friend in Lagos?
No, a one-off loan to a friend is not a money lending business. The Lagos State licence targets people who lend at interest regularly, as a commercial activity. If in doubt, ask a lawyer or the relevant ministry.
What should I do if a loan app harasses my contacts in Lagos?
Keep the messages your relatives received, save the evidence, then uninstall the app and file a complaint with the FCCPC. Harassment and defamation are banned by the DEON regulations, and data misuse can also be reported to the NDPC.
Can an ajo collector be prosecuted if they disappear?
Yes, a complaint for breach of trust or fraud can be filed with the Lagos police. The chances of getting the money back remain slim, however, which is why you should choose a known collector and record every contribution.
Does the Citizens' Mediation Centre handle debts between individuals?
The centre deals with many civil disputes between residents, including, depending on the case, financial or rental disagreements. Mediation requires both parties to agree; if it fails, court action remains open. Ask at its nearest office.