Skip to main content
SpringerLink
Log in

Consumer Credit and Customary Law in Nigeria

  • Chapter
  • First Online:
Nigerian Consumer Credit

  • 62 Accesses

Abstract

Customary law comprises of customs acknowledged by members of a community as binding amongst them. Section 258(1) of the Evidence Act 2011 defines ‘custom’ as ‘a rule which, in a particular district, has, from long usage, obtained the force of law’.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    See also Aromoloaron v Kupoliyi (1994)2 NWLR (Pt 325) 221 at 237.

  2. 2.

    JAM Agbonika and JAA Agbonika, Commercial Law (Ibadan, Ababa Press Ltd 2022).

  3. 3.

    The Constitution vests judicial powers in the courts established by it or under powers conferred by it including the Sharia Courts of Appeal and Customary Courts of Appeal. See ss 6(5) f-I, 237(1)b, 260–267 (for Federal Courts); and 275–282 for State Courts.

  4. 4.

    Agbonika and Agbonika, Commercial Law (n 70).

  5. 5.

    Sections 16–19, Evidence Act 2011.

  6. 6.

    Evidence Act 2011, s 18(1).

  7. 7.

    Agbonika and Agbonika, Commercial Law (n 70).

  8. 8.

    ibid.

  9. 9.

    ibid.

  10. 10.

    Yakor v Governor of Plateau State & 2 Ors (1997) 4 NWLR (Pt 498) 216.

  11. 11.

    Danmole v Dawodu (1958) 3 FSC 46.

  12. 12.

    Section 36 (12) CFRN. Although Sharia law derives from the Holy Quran and Hadiths of Prophet Mohammed, they do not count as ‘written law’ as intended under this provision because the legislature did not enact them.

  13. 13.

    (1958) 3 FSC 46.

  14. 14.

    (1994) 12 SCNJ 89.

  15. 15.

    Okonkwo v Okagbue (1994) 9 NWLR (Pt 368) 345.

  16. 16.

    Edet v Essien (1989) 11 NLR 47.

  17. 17.

    Section 18 (3) Evidence Act, 2011. See IO Babatunde, ‘English Jurisprudence and African Law Need to Revisit R v Udo Aka Ebong’ (2009) 1 OOU LJ 201; AO Obilade, The Nigerian Legal System (Ibadan, Spectrum Books Limited 2001) 17–52.

  18. 18.

    (1959) 4 FSC 44.

  19. 19.

    (2014) 11 NWLR (Pt 1418) 384.

  20. 20.

    See also Mojekwu v Mojekwu (1997) 7 NWLR 283.

  21. 21.

    (1958) 3 FSC 46.

  22. 22.

    Eshugbayi Eleko v Officer Administering the Government of Nigeria [1931] AC 662.

  23. 23.

    O Sofola, The Nigerian Law of Consumer Credit and Security (PhD book, King’s College, University of London 1988); T Falola, ‘My Friend the Shylock’: Money-Lenders and their Clients in South-Western Nigeria’ (1993) 34 Journal of African History 403–423; C Udry, ‘Credit Markets in Northern Nigeria: Credit as Insurance in a Rural Economy’ (1990) 4 (1) The World Bank Economic Review 251–269.

  24. 24.

    See A Dusuki and A Abozaid, ‘A Critical Appraisal on the Challenges of Realizing Maqāṣid al-Sharīʿah in Islamic Banking and Finance’ (2007) 15 (2) IIUM Journal of Economics and Management 143–165. See also M El-Gamal, Islamic Finance: Law, Economics, and Practice (Cambridge, Cambridge University Press 2006).

  25. 25.

    (1908) 1 NLR 81.

  26. 26.

    Section 277, CFRN.

  27. 27.

    WF Maloney, Informality Deconstructed (Washington, DC, World Bank 2006). See also K Hart, ‘Informal Income Opportunities and Urban Employment in Ghana’ (1973) 11 Journal of Modern African Studies 61–89, 68.

  28. 28.

    Maloney (n 8 in Chapter 5).

  29. 29.

    The size of customary markets varies depending on the area of the country. In a study of rural women in one of the 36 states in Nigeria, 77.5% of respondents claimed to have sourced funds from a customary lender. See SJ Ibitoye and others, ‘Assessment of Informal Credit in Mobilizing Funds for Agricultural Production in Ijumu Local Government Area of Kogi State, Nigeria’ (2015) 7 (1) Asian Journal of Agricultural Extension, Economics & Sociology 4.

  30. 30.

    See discussions of semi-formal markets in Chapter 3.

  31. 31.

    E Osabuohien and O Ola-David, ‘Esusu (Nigeria)’ in A Ledeneva (ed), The Global Encyclopaedia of Informality: Understanding Social and Cultural Complexity, Volume 2. (London, UCL Press 2018) 66–69.

  32. 32.

    Sections 16–19, Evidence Act 2011.

  33. 33.

    AO Obilade, The Nigerian Legal System (Ibadan, Spectrum Books Limited 2001).

  34. 34.

    Agbonika and Agbonika, Commercial Law (n 70).

  35. 35.

    SBA Oloko, ‘Introduction: Protection and Violation of Child Right in Nigeria’ in UNICEF (ed), Child Protection in Nigeria: Summary of Research Finding on Protection and Violation of Children’s Rights (Lagos, Jerome Laiho & Associate Ltd 1986).

  36. 36.

    IA Ayua and Okagbue, The Rights of the Child in Nigeria (Lagos Nigerian Institute of Advanced Legal Studies, 1996) 30.

  37. 37.

    Cap C50 Laws of the Federation of Nigeria, 2004.

  38. 38.

    M AjaNwachuku, ‘A Legal Analysis of the Nebulous Concept of Childhood in Nigeria’ (2016) 7 Beijing Law Review 122–126. https://doi.org/10.4236/blr.2016.72013.

  39. 39.

    Cap 76, Laws of Western Nigeria 1959.

  40. 40.

    NV Loayza, ‘Informality in the Process of Development and Growth’ (World Bank Development Research 2019) http://pubdocs.worldbank.org/en/303301465334000439/Informality-Development-and-Growth.pdf, accessed 5 May 2019.

  41. 41.

    International Labour Organisation, ‘Five Facts about Informal Economy in Africa’ (ILO, 18 June 2015) http://www.ilo.org/addisababa/whats-new/WCMS_377286/lang--en/index.htm, accessed 5 May 2019.

  42. 42.

    International Monetary Fund, Regional Economic Outlook: Sub-Saharan Africa Restarting the Growth Engine (Washington, DC, International Monetary Fund 2017).

  43. 43.

    SL Sanusi, ‘Banking Reform and Its Impact on the Nigerian Economy’ (University of Warwick’s Economic Summit, Warwick, February 2012) http://www.bis.org/review/r120320d.pdf, accessed 5 May 2019.

  44. 44.

    A Kochar, ‘An Empirical Investigation of Rationing Constraints in Rural Credit Markets in India’ (1997) 53 (2) Journal of Development Economics 339–371.

  45. 45.

    Illegal debt recovery practices by lenders and law enforcement agencies involving the intimidation, physical violence, detention, arbitrary seizure of borrowers’ assets and other breaches of the fundamental rights of borrowers have been documented in a long line of case law in Nigeria. See Economic & Financial Crimes Commission v Diamond Bank Plc & Ors (2018) LPELR-44217(SC). See also AG Plateau State v AG Nasarawa (2005) 129 LRCN 1523 at 1531; UNIBIZ v Commercial Bank (2005) 125 LRCN 1484 at 1495; University of Ilorin v Oyelana (2001) FWLR (Pt 83) 2193 at 2209.

  46. 46.

    V Diaz-Moriana and C O’Gorman, ‘Informal Investors and the Informal Venture Capital Market in Ireland’ (2003) 3 (6) Journal of Asian Scientific Research 630–643; AA Babajide, ‘The Relationship Between the Informal and Formal Financial Sector in Nigeria: A Case Study of Selected Groups in Lagos Metropolis’ (2011) 1 (10) International Journal of Research in Computer Application and Management 24–32.

  47. 47.

    For example, in a recent policy paper, the World Bank in highlighting the disadvantages of informal markets noted that ‘complex and nontransparent trading systems can be discouraging to foreign investors and can otherwise undermine trade policy and the international competitiveness of developing countries’. See N Benjamin and others, ‘Informal Economy and the World Bank’ (2014) Policy Research Working Paper 6888 http://documents.worldbank.org/curated/en/416741468332060156/pdf/WPS6888.pdf, accessed 09 December 2019. See also E Dabla-Norris and others, ‘Causes and Consequences of Income Inequality: A Global Perspective’ (2015) SDN/15/13 IMF Staff Discussion Note 4 https://www.imf.org/external/pubs/ft/sdn/2015/sdn1513.pdf, accessed 12 December 2019. It is, however, not the case that formal markets are always more transparent than informal markets e.g. if one contrasts markets for securitisation with the customary credit market described at Sect. 4.4 below.

  48. 48.

    Loayza (n 21 in Chapter 5).

  49. 49.

    ibid.

  50. 50.

    Presidential Technical Committee on Land Reform, Land Reform in Nigeria: Basic Facts (3rd edn, Abuja, The Presidency, Office of the Secretary to the Government of the Federation 2013).

  51. 51.

    H de Soto, ‘Excerpts from the Mystery of Capital’ (2017) 6 Brigham-Kanner Property Rights Conference Journal 9–71.

  52. 52.

    ibid.

  53. 53.

    M Dasgupta, ‘Moving from Informal to Formal Sector and What It Means for Policymakers’ (World Bank, 20 September 2016) http://blogs.worldbank.org/jobs/moving-informal-formal-sector-and-what-it-means-policymakers, accessed 5 May 2019.

  54. 54.

    S Yu and F Ohnsorge, ‘The Challenges of Informality’ (World Bank, 18 January 2019) http://blogs.worldbank.org/developmenttalk/challenges-informality, accessed 5 May 2019.

  55. 55.

    Dasgupta (n 34 in Chapter 5).

  56. 56.

    LA Keister and HY Lee, ‘The One Per Cent: Top Incomes and Wealth in Sociological Research’ (2014) 1 (1) Social Currents 13–24; M Kumhof, R Rancière, and P Winant, ‘Inequality, Leverage, and Crises’ (2015) 105 (3) American Economic Review 1217–1245; T Piketty, Capital in the Twenty-First Century (Cambridge Massachusetts, Harvard University Press 2014).

  57. 57.

    BS Bernanke, TF Geithner, and HM Paulson, Firefighting: The Financial Crisis and its Lessons (New York, Penguin Books 2019) 11–12.

  58. 58.

    M Egan, ‘Wells Fargo Accused of Preying on Black and Latino Homebuyers in California’ (CNN Business, February 2018) https://money.cnn.com/2018/02/27/investing/wells-fargo-sacramento-lawsuit-discriminatory-lending/index.html, accessed 09 December 2019; R Rothacker and D Ingram, ‘Wells Fargo to Pay $175 Million in Race Discrimination Probe’ Reuters (7 July 2012) https://www.reuters.com/article/us-wells-lending-settlement/wells-fargo-to-pay-175-million-in-race-discrimination-probe-idUSBRE86B0V220120712, accessed 09 December 2019.

  59. 59.

    Dasgupta (n 34 in Chapter 5).

  60. 60.

    E Hobson, WK Sameh, and M Angus, Uganda—From Regulators to Enablers: Role of City Governments in Economic Development of Greater Kampala (Washington DC, World Bank 2017) http://documents.worldbank.org/curated/en/860311505816462189/Uganda-From-regulators-to-enablers-role-of-city-governments-in-economic-development-of-greater-Kampala, accessed 5 May 2019.

  61. 61.

    Many consumer borrowers do not understand how compound interest is calculated in contrast to simple interest, which casts some doubt as to how well credit contracts are broadly understood by consumer borrowers when they enter into new loan transactions.

  62. 62.

    Ntiedo (n 162 in Chapter 3) 305–323.

  63. 63.

    T Falola, ‘My Friend the Shylock’: Money-Lenders and Their Clients in South-Western Nigeria’ (1993) 34 Journal of African History 403–423; M Ekpo, E Alobo, and J Enyia, ‘Impediments to the Development of a Strong Consumer Credit System in Nigeria’ (2018) 5 (1) World Journal of Social Science 36–45.

  64. 64.

    ibid.

  65. 65.

    The rules of court, mainly the Civil Procedure Rules of the various States of the Federation make provision for a fast-track rule towards disposing off matters of liquidated money demands which are often filed on the undefended list with the aim of reaching quick judgment. However, shrewd lawyers always figure a way to move such matters to the General Cause list where litigation gets protracted. For instance, the Nigerian Supreme Court case of Khaled Barakat Chami v UBA Plc (2010) 6 NWLR (Pt. 1191) 474 SC first originated in the High Court in 1999, but the judgment of the Supreme Court was only delivered eleven years after in 2010. Similarly, in the Supreme Court case of Chief Peter Amadi Nwankwo & Anor v Ecumenical Development Co-operative Society (EDCS) UA (2007) 5 NWLR (Pt.1027) 377, litigation on loan due to be repaid by the appellants in 1990 lasted up to 2007 when the apex court delivered its judgment on a procedural issue without delving into the substantive issue of the debt. With the hardship of debt recovery in Nigeria, lending posed an apparent moral hazard as the gain derivable from non-repayment outweighs the punishment for default. See J Zinman, ‘Consumer Credit: Too Much or Too Little (or Just Right)?’ (2014) 43 (2) The Journal of Legal Studies S209–S237.

  66. 66.

    Central Bank of Nigeria, ‘Exposure Draft of the National Financial Inclusion Strategy Refresh’ (CBN 2018) https://www.cbn.gov.ng/Out/2018/CCD/Exposure%20Draft%20of%20the%20National%20Financial%20Inclusion%20Strategy%20Refresh_July%206%202018.pdf, accessed 16 October 2018.

  67. 67.

    A Rona-Tas and A Guseva, ‘Consumer Credit in Comparative Perspective’ (2018) 44 Annual Review of Sociology 61.

  68. 68.

    S Heath and E Calvert, ‘Gifts, Loans and Intergenerational Support for Young Adults’ (2013) 47 (6) Sociology 1120–1135.

  69. 69.

    ibid.

  70. 70.

    Y Yuan and L Xu, ‘Are Poor Able to Access the Informal Credit Market? Evidence from Rural Households in China’ (2015) 33 China Economic Review 232–246.

  71. 71.

    S Rutherford, ‘The Savings of the Poor: Improving Financial Services in Bangladesh’ (1998) 10 (1) Journal of International Development 1–15.

  72. 72.

    D Collins, S Rutherford, and O Ruthven, Portfolios of the Poor: How the World’s Poor Live on $2 a Day (Princeton University Press 2009).

  73. 73.

    R van den Brink and JP Chavas, ‘The Microeconomics of an Indigenous African Institution: The Rotating Saving and Credit Associations’ (1997) 45 (4) Economic Development and Cultural Change 746–772; S Ambec and N Treich ‘Roscas as Financial Agreements to Cope with Self-Control Problems’ (2007) 82 Journal of Development Economics 120–137.

  74. 74.

    PK Kimuyu, ‘Rotating Saving and Credit Associations in Rural East Africa’ (1999) 27 (7) World Development 1299–1308; S Guha and G Gupta, ‘Microcredit for Income Generation: The Role of RoSCA’ (2005) 40 (14) Economic & Political Weekly 1470–1473; A Manji, ‘Eliminating Poverty? “Financial Inclusion”, Access to Land, and Gender Equality in International Development’ (2010) 73 The Modern Law Review 985–1025.

  75. 75.

    P Collier, ‘Social Capital and Poverty: A Micro-Economic Perspective’ in C Grootaert and T van Bastelaer (eds), The Role of Social Capital in Development: An Empirical Assessment (Cambridge, Cambridge University Press 2002) 19–41.

  76. 76.

    A Sen, Development as Freedom (Oxford, Oxford University Press 1999).

  77. 77.

    I Gough, JA Mcgregor, and L Camfield, ‘Theorising Wellbeing in International Development’ in I Gough and A Mcgregor (eds), Well-being in Developing Countries: From Theory to Research (Cambridge, Cambridge University Press 2007) 3–43; SC White, ‘Analysing Wellbeing: A Framework for Development Practice’ (2010) 20 (2) Development in Practice 158–172.

  78. 78.

    C Grootaert and T van Bastelaer, ‘Introduction and Overview’ in C Grootaert and T van Bastelaer (eds), The Role of Social Capital in Development: An Empirical Assessment (Cambridge, Cambridge University Press 2002) 1–15.

  79. 79.

    Collins, Rutherford, and Ruthven (n 53 in Chapter 5).

  80. 80.

    S Jain, ‘Symbiosis Vs. Crowding-Out’ (1999) 59 (2) Journal of Development Economics 419–444; Y Yuan and L Xu, ‘Are Poor Able to Access the Informal Credit Market? Evidence from Rural Households in China’ (2015) 33 China Economic Review 232–246; A Kochar, ‘An Empirical Investigation of Rationing Constraints in Rural Credit Markets in India’ (1997) 53 (2) Journal of Development Economics 339–371; C Bell, T Srinivasan, and C Udry, ‘Rationing, Spillover, and Interlinking in Credit Markets: The Case of Rural Punjab’ (1997) 49 (4) Oxford Economic Papers 557–585.

  81. 81.

    Sofola (n 4 in Chapter 5).

  82. 82.

    ibid.

  83. 83.

    ibid.

  84. 84.

    See Chapter VII CFRN (as amended) 1999.

  85. 85.

    Sofola (n 4 in Chapter 5); Falola (n 4 in Chapter 5) 403–423.

  86. 86.

    Sofola, (n 4 in Chapter 5) 72.

  87. 87.

    Adjei v Dabanka (1930) WACA 63 at 66–67.

Author information

Authors and Affiliations

  1. Faculty of Law, Veritas University, Abuja, Nigeria

    Philemon Iko-Ojo Omede

Authors
  1. Philemon Iko-Ojo Omede
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Philemon Iko-Ojo Omede .

Rights and permissions

Reprints and permissions

Copyright information

© 2022 The Author(s), under exclusive license to Springer Nature Switzerland AG

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Omede, P.IO. (2022). Consumer Credit and Customary Law in Nigeria. In: Nigerian Consumer Credit. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-11740-4_4

Download citation

  • DOI: https://doi.org/10.1007/978-3-031-11740-4_4

  • Published:

  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-031-11739-8

  • Online ISBN: 978-3-031-11740-4

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

Publish with us

Policies and ethics

Search

Navigation