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A new Kenyan bill seeks to license and regulate digital lending platforms in the country, in a bid to clamp down on the issuance of high-interest loans as well as the predatory practices that have accompanied the industry’s massive growth.
Mobile lending apps have become an easy source of credit for Kenyans who don’t have accounts with banks and other traditional financial institutions, or the regular income needed to borrow from such establishments.
Since the launch of the mobile-based savings and loans product M-Shwari by Safaricom in 2012, dozens of lending apps have popped up offering short-term loans, and with many selling the goal of financial inclusivity.
The apps in the market include Silicon Valley–backed Tala and Branch, as well as Zenka, Opesa and Okash, which is owned by the Norwegian software maker Opera.
Financial inclusion defined as access to useful and affordable financial products and services that meet needs and are delivered in a responsible and sustainable way rose from 26.7% in 2006 to 82.9% in 2019 in Kenya, driven largely by the growth of mobile money.
A 2019 survey on digital credit found that 13.6% of Kenyans had borrowed loans from a digital lender, citing their convenience and ease of access.
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