- Atwoli says microfinance institutions have not only made the average Kenyan poorer but also killed their businesses.
- He has reminded the CBK Governor, who is a practising Christian, that if anything, the conduct of the money lenders’ are not only illegal but also ungodly.
Central Organization of Trade Unions (COTU) Secretary-General Francis Atwoli has come out guns blazing against digital microfinance institutions over their “extortionate” rates.
In a statement to the press on Tuesday, an abrasive and straight-talker Atwoli asked the Central Bank Of Kenya (CBK) and Parliament to crack down on the microfinance institutions, stating that their conduct is “not only illegal but also ungodly.”
According to Atwoli, COTU has received countless petitions from
Kenyans lamenting about the exploitation being meted against them by the notorious money lenders.
The 71-year-old maintains the net results of digital lenders’ mode of operation has only served to impoverish the customers further, rather than help them grow economically.
“In the name of financial inclusion, the digital microfinance institutions, and by extension mobile lenders, have continued impoverishing Kenyans by imposing draconian interest rates on their credit facilities. This… is daylight robbery practised by institutions that…are supposed to be helping the poor and small businesses grow,” the statement read in part.
Francis Atwoli Sees Exploitation?
While drawing comparisons to banks in Kenya that are regulated by CBK, the COTU boss has noted that digital lenders issue interest rates as far as 500% against the bank’s 14% cap.
“With most banks having their interest rates between 12% to 14% per annum, most of the digital lending facilities have interest rates of between 70% to 500% per annum. Fuliza by Safaricom, has an interest rate of 1% per day and more than 360% p.a. Others …have an interest rate of 25% after every two weeks while others 33% for every week… no amount of ‘risk factor’ can substantiate this kind of banditry,” he argues.
The trade unionist has urged CBK to fast-track its move to save Kenyans “from the digital microfinance institutions that are exploiting Kenyans left, right and centre.”
He also called upon Parliament to come up with sound legislation, that will facilitate the crackdown on the “rogue digital microfinance sector” in Kenya.
In a planned effort to regulate the digital lending sector, CBK will be pushing for their licensing.
Should the Central Bank (Amendment) Bill, 2021 be passed into law, the lenders will risk having their linceses cancelled if they fail to comply with data protection laws.