This archive report was first published on 5 August 2020.
On August 5, 2020, the Central Bank of Kenya took a significant step towards regulating the digital mobile space by introducing controls on charges and fees on digital lending.
The proposed Central Bank of Kenya (Amendment) Bill, 2020 aims to regulate digital financial products and services, including digital credit providers, and has attracted mixed reactions from the public.
According to Ivan Mbowa, regional general manager for Tala and director at Digital Lenders Association, the proposal is unfair as it charges every customer the same rate, regardless of their risk profile. “Because of different intended use of the funds. Somebody borrowing for consumption should have a different rate from one borrowing to put in business.”
The Digital Lenders Association opposes the Bill, arguing that it would be ill-thought and that the digital lending space should continue using risk-based lending that examines the ability of a borrower to furnish loans based on their data.
While some of these regulations will weigh heavily on digital lenders, especially in the innovation sector, it is essential to note that they have filled a space left by traditional banks.
The public is welcome to bring ahead their input and comments on the proposal. Public opinion should be emailed to the Parliament Clerk before August 11th.
