Digital Lenders to Cut Access to Loans to Customers with Multiple Online Credit Apps

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The mobile lending space in Kenya has grown significantly. Every other month or week, a new mobile loan app finds its way into the market, and these apps have a healthy stream of customers because they offer a service that is traditionally very difficult to access, owing to the rigidity of banking institutions that require a ton of paperwork, and the difficulty of accessing saccos that have their set of stringent rules.

These cases have done a good job laying the foundation for lending firms, which use digital services (hence their ‘fintech’ branding) to offer loans to customers. We all know the outcome of this development: while some people have leveraged these services to grow themselves, others have found themselves indebted to these firms in scenarios they could have avoided.

Admittedly, and as we have discussed before, the mobile lending space is chaotic. Arguably all participating apps are not bound to finance or data protection regulations, a setback that has allowed them to expand their trade while harming the people they are supposed to help.



After all, aren’t these businesses out here to make a profit? – and what is the quickest way to rake appreciable returns besides sharking loans to unsuspecting customers, and subject them to astronomical interest rates and while at it, ignore a bunch of financial regulations?

These are issues that have been raised by customers and industry insiders and regulators. The Central Bank of Kenya (CBK), for instance, has been under the spotlight for failing to recognize this problem in time. In its defense, the CBK’s legal mandate to regulate mobile loan apps is trivial at best, and the growth of these services has surpassed the speed at which regulations are designed to manage a fairly infant market.

However, all is not bleak because towards the end of 2018, the institution started lobbying for tougher policing of digital lenders based on the National Payment Systems Act. At that time, the CBK revealed that up to more 6.5 million Kenyans were using online loan apps, and used those funds to feed their addiction to another ‘vice’ – betting.

In the spirit of regulating the market, twelve lending apps have since joined what is called the Digital Lenders Association of Kenya (DLAK). The institution, whose members include the likes of Tala and Alternative Circle’s Shika app (other popular companies such as Branch and Okash are suspiciously missing) has been busy in the last couple of days, following an announcement by the CBK that it was doubling down on online lenders to adhere to some housekeeping rules.

To begin with, DLAK proposes that people who have more than loan app in their smart devices should not access loans. This suggestion is outrageous as it sounds, will likely be shot down because it will put small players out of business.

Secondly, and this has already been signed, is a code of conduct that will limit initial loans to KES 4000 for customers who have no borrowing history. These groups include people who have probably never accessed online loans before – although we are skeptical, they can get access to that amount considering limits are based on transactions and repayments histories.

DLAK is also proposing an in-app access of digital borrowing patterns to customers. The information is often used by lenders to determine loan limits.


There is a clause that promises to seal any data privacy abuses. The promise is entirely dependent on the progression or lack thereof of two data protection bills at the Senate and Parliament.

DLAK’s code of conduct is being examined and edited as of this writing. The organization says it will communicate its decision in two months’ time when we assume the proposal will be signed to catapult the space into a more organized ecosystem.

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