In a bid to protect consumers from fraudulent digital lenders who are on the rise in Kenya, the government have notified unregulated operations of an intending labelling.
The Governor of the Central Bank of Kenya (CBK), Patrick Njoroge raised concerns over the increasing number of mobile loan applications that may be exploiting Kenyans. While asking the public to be vigilant to avoid being duped by unscrupulous operators who are exploiting consumers’ ignorance, Njoroge noted that “All financial services and products will soon have a label of approval from the CBK to be able to guide users on which products to use.”
An estimated 23.5 million (27 percent) of Kenyan adult are digital borrowers, about 17 percent are 90-day active. In total, there are over six million unique digital borrowers in Kenya.
FSP Kenya discovered that one in five digital borrowers experienced a lack of transparency as 19 percent indicated that they were charged fees they
didn’t expect, they did not fully understand the costs or fees associated with the loan and the lender unexpectedly withdrew money from the account.
While digital credit represents a tremendous step forward for formal financial inclusion, a lot more is needed to understand the real economic and social impact of digital credit on Kenyans. That is why the Central Bank has stepped up to ensure the sector is properly regulated
“As the body which regulates commercial banks and deposit-taking micro-finance institutions, we will ensure that merchants do not take advantage of Kenyans who are seeking quick loans,” Njoroge said.