This archive report was first published on 31 October 2019.
Kenya's mobile lending market has witnessed rapid growth, with six out of ten people owning a smartphone and 91% of loans being disbursed through mobile handsets. The proliferation of internet technologies has created a pool of 30,000 apps, including tens of digital lending apps.
However, the lack of a unified regulatory framework has led to hidden costs, data privacy concerns, identity fraud, and high default rates for small loans. To address these issues, the Digital Lenders Association of Kenya (DLAK) was formed, bringing together leading fintech companies to promote transparency and good conduct in the industry.
DLAK's Code of Conduct aims to balance the interests of lenders and borrowers, promoting a fair and reasonable standard practice. The association also proposes the preparation of a comprehensive White Paper on the phone-based money lending market, to be developed in collaboration with regulators and a prominent professional auditing firm.
As the mobile lending market continues to grow, DLAK's efforts are crucial in ensuring that the industry operates on a triple-bottom-line approach, recognizing the economic-social nexus of 'doing well by doing good.'
With the guidance of regulators, DLAK will work towards establishing a more focused, comprehensive, and effective regulatory framework for the mobile lending space.
According to a study by Financial Sector Deepening-Kenya (FSD), there are between 50 and 100 non-bank lenders in the market, with the Central Bank of Kenya (CBK) being a better source of the estimated total number of all phone-based money lenders.
DLAK's efforts are a step in the right direction towards creating a more transparent and responsible mobile lending industry in Kenya.
