Not too long ago, many digital lending platforms in Nigeria adopted an aggressive and unethical approach to loan recovery – public shaming. Some of these apps circulated customers’ photos with humiliating messages, often sent to their contact lists. One such incident, where debtor images were widely shared online, sparked national outrage and reignited debate about ethical debt recovery practices in the digital age.
The practice became so widespread that regulators had to step in. The Federal Competition and Consumer Protection Commission (FCCPC) issued warnings and rolled out new compliance requirements. Digital lenders were compelled to register and adhere to operational guidelines. Failure to comply came with strict penalties. The Central Bank of Nigeria also weighed in, and at some point, both agencies appeared to clash over who had the constitutional authority to regulate the fintech lending space. But that’s a conversation for another day.
Back to the core issue: how do we recover loans effectively without crossing ethical lines?
Tech and empathy as a new standard
This is where forward-thinking recovery firms like Mida Technologies are leading a quiet revolution. We believe that recovery can be both tech-driven and human-centred—a combination that yields better results and preserves the dignity of the borrower.
Collections don’t have to be crude to be effective. Technology gives us tools to segment debtors, track behavioural patterns, and automate respectful engagements across multiple channels—SMS, email, calls, and even WhatsApp. Using tools like digital skip tracing and repayment tokenisation, we can help lenders reach the right customers with the right message at the right time.
More importantly, we approach recovery with empathy. We understand that default doesn’t always mean unwillingness to pay. Life happens—job loss, medical emergencies, inflation, etc. Instead of harassment, we offer understanding and structured repayment plans. Instead of threats, we offer flexibility.
Why this approach works
The results are increasingly evident. In our experience at Mida Technologies, a tech-and-empathy approach can help lenders recover up to 40 percent of delinquent loans that may have otherwise been written off. That’s a significant recovery boost—one that directly improves liquidity and strengthens lenders’ sustainability.
When borrowers are treated with dignity, they are more likely to respond, repay, and remain in good standing. This leads to higher retention, lower customer acquisition costs, and a more inclusive and resilient credit ecosystem.
It also protects the lender’s reputation. In Nigeria’s highly connected market, news of mistreatment travels fast. Ethical, technology-enabled recovery helps preserve trust while still delivering strong results.
Outsourcing collections—A smarter way to operate
Just as telcos outsource tower operations and logistics companies outsource delivery, lenders can (and should) outsource debt collections to specialised partners. This allows fintechs and financial institutions to focus on their core business—credit scoring, customer acquisition, product innovation—while leaving recovery to teams that are equipped with the tools, processes, and compliance frameworks to do it right.
Debt collection companies not only improve recovery rates; they also reduce internal operational costs, eliminate the need for aggressive in-house teams, and help institutions stay compliant with regulatory requirements.
Boosting financial inclusion
There’s another dimension to all of this—financial inclusion. When borrowers are shamed, blacklisted, or excluded from formal systems, they are pushed into informal borrowing channels, where interest rates are higher and protections are fewer.
By using tech and empathy to recover loans, we keep customers within the formal system. Borrowers who repay—even after default—can rebuild their credit score, access new financial products, and continue their journey towards financial empowerment.
This is the future we envision: one where recovery is not a dead end but a path back into the financial ecosystem.
The challenges
Of course, there are challenges. Integrating tech tools into traditional recovery processes requires investment, training, and change management. Regulatory clarity is still evolving, and not all lenders are willing to shift away from the fear-based strategies of the past.
But progress is being made. More lenders are starting to understand that sustainable recovery must be data-driven, respectful, and compliant. And more borrowers are demanding fairness and transparency—rightfully so.
In conclusion, recovering loans through tech and empathy is not just a moral decision; it’s a strategic one. It leads to better results, happier customers, and a healthier credit market. It helps lenders recover funds and helps borrowers regain trust. In a country where access to credit is still growing, we must ensure that recovery practices evolve alongside innovation.
Tech gives us the tools. Empathy gives us the lens. Together, they offer a better way forward.
Adija Uzodinma is the co-founder and chief operating officer of Mida Technologies, a fintech company focused on ethical, tech-enabled debt recovery and credit lifecycle management across Africa. She previously served as Head of IT and Operations at Renmoney Microfinance Bank for over seven years.
