Central Bank of Kenya to go after online credit providers
SCI & TECH
By Lee Mwiti | August 2nd 2018
NAIROBI, KENYA: The Central Bank of Kenya (CBK) is pushing for strict regulations to cut down the operations of digital loan platforms by bringing them tightly into the fold of the National Payment Systems Act.
While addressing Parliament’s Departmental Committee on Communication, Information and Innovation, CBK Governor Patrick Njoroge revealed that a majority of Kenyans have become enchained to these platforms and it is time the platforms were reined in.
“I want to confirm today that these platforms are worse than the village shylocks. At least the shylocks hide themselves. These platforms shout about themselves openly on the internet while impoverishing Kenyans,” Dr Njoroge told the committee.
The governor divulged statistics from CBK where about 6.5 million Kenyans are digital borrowers.
Of these at least 3 per cent take the loans to try their luck in betting.
At the same time, the Kenyans who are taking the loans lack enough financial literacy and borrow from one network to the other, while accruing debts that they can barely get themselves out of.
There are currently over 25 digital credit providers, with new services being launched continually, according to a recent report by online marketplace Jumia.
Of these, Tala Kenya, formerly Mkopo Rahisi and Branch are the most popular especially among low income earners.
The committee Chairman William Kisang had earlier expressed his amazement at the lack of regulations to keep in check the Fintech companies operating the platforms.
“What CBK does is simply warn Kenyans about these platforms. They don’t go ahead to actually try and regulate them, something that has exposed the consumer to a lot of exploitation at the hands of the Fintech companies operating the platforms. What is worse is that most of the Fintechs are international companies only here to make profits,” Mr Kisang said.
Njoroge on the other hand defended CBK saying that the bank is legally entitled by law only to regulate financial entities that take deposits, and the law was not clear on what the bank should do in order to regulate the digital platforms that are only into lending.
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