This archive report was first published on 27 September 2019.
As mobile money applications and online banking increase financial inclusion in Kenya, players in the financial sector warn that easy money from these apps is proving to be a debt trap for many youths.
According to Percy Opio, an associate at the Leadership Group, mobile lenders should offer incentives on early payment to encourage responsible borrowing.
Easy access to credit has led to a surge in non-performing loans, prompting lenders to consider holding frequent sensitization programs to create awareness on the importance of responsible borrowing.
Opio suggests that offering incentives and tokens to borrowers who pay their debt on time will encourage early debt payments and reduce non-performing loans in the country.
Additionally, banks and financial institutions have been urged to come up with innovative ways to recover debt from their defaulters without jeopardizing their creditworthiness.
With the growing use of financial technologies, lenders have been advised to create infrastructure that will protect customers' data and privacy.
As the Digital Lenders Association of Kenya calls for self-regulations, the government has been urged to create policies to oversee the digital lending sector and protect customers from exploitation.
Published on September 27, 2019
