Government watchdog, the Competition Authority of Kenya (CAK) launched an inquiry to the digital credit market in the country.
They announced that they will investigate both regulated and unregulated digital lenders which have led a lot of people to be trapped into a debt cycle.
The watchdog will be investigating a number of things. They’ll determine the size and nature of this digital credit market, identify risks consumers face, address probable fraud by these services, improve consumer redress for these products, increase consumer control over personal information and inform the development of policies to ensure adequate consumer protection.
CAK aims to conduct the study by holding a number of meetings and receiving views from members of public (oral or written submissions) from any person with relevant information. People are encouraged to submit information within 3 weeks as from Friday last week.
This follows a report where the Central Bank of Kenya and the National Treasury were reported to be working to tame predatory lending apps in the country.
These apps have ballooned in number in the last 5 years and they offer high interest rates and short repayment periods to Kenyans. Their interest rates are as high as 480% per year and some loans are meant to be paid within 15 days. This combination traps people into a vicious trap cycle which is stressful.
Google also stepped in to rein in on the predatory apps last year. They introduced policies last year in August which forced these apps to comply with the various rules. However, those policies were not complied fully due to lack of regulation in the country and it seems the local agencies are looking to fill this regulatory void.