Digital money lending businesses in Kenya have been providing quick loan services to ready customers in an unregulated environment. While it may appear that the lack of regulation allowed ease of entry into the digital money lending industry, services like this should be regulated, especially because there have been reports of shaming borrowers, hidden fees, penalties, etc. It was not a surprise when the President of Kenya, approved a new law on Tuesday.
According to the Office of the President, the amended Central Bank Act 2021 gives the Central Bank of Kenya authority to license digital lenders in Kenya as well as ensure the existence of fair and non-discriminatory practices in the credit market.
As opposed to mere registration requirements, new digital money lending businesses are now required to be licensed before commencing operations, while existing digital lenders now have six months to apply for licensing. In the future, mobile money lending apps will be required to reveal all the information concerning their products, including details on pricing, penalties for defaulters, and the modalities of debt recovery.