Tuesday, December 7, 2021
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HomeBusinessKenya inches closer to regulating digital lenders

Kenya inches closer to regulating digital lenders

Kenya has moved a step closer to regulating digital lenders after a parliamentary committee backed a law giving the central bank power to regulate them following complaints from borrowers who can pay annualised interest rates of more than 100%.

Users of mobile phone-based micro-lenders, which include the Silicon Valley-backed Tala, have surged to 2 million in 2019, from 200,000 in 2016, the central bank said.

But the dozens of lenders are not covered by any of the existing regulatory laws.

“The central bank of Kenya will be obligated to ensure that there is a fair and non-discriminatory marketplace for access to credit,” the finance and national planning committee said in a report on the proposed law seen by Reuters yesterday.

Rogue Digital Lenders

The recommendation is almost certain to pass through parliament since the government has a sizeable majority of lawmakers on its side.

Apart from charging high interest rates, consumers say the lenders have been infringing on their data privacy by bombarding the contacts they have saved on their mobile phones with calls and messages when they default.

“Licensing of digital lenders is necessary in ensuring that they are properly regulated,” the committee said.

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