Smartphone adoption and MPESA have created a new way for digital shylocks to lend people money. This has led to the ballooning of loan apps that charge high interest rates to Kenyans in the last 5 years.
The high interest rates and the short repayment periods have led to massive defaulting by Kenyans. This has become so bad to the point where financial institutions in the country want to take action.
Apparently, CBK’s deputy governor, Sheila Mbijiwe said that CBK will soon change laws to monitor the unregulated money lending apps. Curently, the regulatory framework is limited to legacy financial institutions such as banks and saccos.
The Treasury on the other hand is in the process of developing a national information sharing policy which is a document you can read here.
This development is key in regulating these “digital shylocks” that have run rampant to unsuspecting Kenyans.
It follows Google’s move last year where they imposed restrictions on predatory loan apps on the PlayStore. They were required to add information like maximum annual percentage rate, minimum and maximum report of repayment, example of total cost of loan and shouldn’t promote personal loans that require repayment in full in 60 days or less.
Well, Google’s plan didn’t work as planned. These loan apps complied on paper but they still offer loans with high interest rates. If the above measures by the CBK and Treasury are put in place, it would mean that this wild industry will finally be tamed.