Digital loan apps have been growing over the last couple of years.
However, over the last couple of months, the apps have been accused of many vices, including blatant personal information violation, harassment and sky high interest loans.
In Kenya, for instance, the apps have come under scrutiny following mass reports that they were using illegal means to recover loans such as harassing customers, and using their personal information to shame them in a bid to compel them to pay.
The issue was raised in Parliament, and legislators started developing a law that would tame the space altogether.
In 2021, the CBK Amendment bill was signed into law. The bill required the CBK to publish regulations about loan apps by March 23, 2022. The regulations cover aspects of licensing, governance, and credit operation of online lenders.
This also means that in a few days, the law will be enforceable. It will imply that company that dispense online loans will be required to put in place appropriate polices, procedures and systems to ensure the confidentiality of customer information and transactions.
There are other regulations about loan recoveries, including a case where the law cites that agents must not use threats or obscene language when talking to their customers.
In Nigeria, such developments have not been made. However, the Federal Government of the country has since unleashed its powers to police some loan apps that have violated customer privacy.
The apps are:
- Easy Moni
- Speedy Choice
The Kenyan case will be interesting to see because there are tens, probably more loan apps that have infiltrated the space. The apps have been successful in their venture, albeit illegal in some instances, because of M-PESA that allows them to send cash right away to a loanee wallet.
It wouldn’t be surprising to see some of them close shop considering the regulations are very tough, and wouldn’t see them survive in the market.