This archive report was first published on 29 December 2019.
Kenya's mobile and digital lenders have revolutionized the country's financial landscape, particularly in the past few years. According to the FinAccess Report released by the Kenya National Bureau of Statistics and Central Bank of Kenya in February 2019, six million Kenyans have accessed a loan from mobile and digital lenders at some point.
These lenders have filled a significant gap in the financial sector by providing credit to individuals who lacked collateral, thereby stimulating economic growth. The Digital Lenders Association of Kenya (DLAK) has been established to promote self-regulation and protect consumers.
DLAK has created a code of conduct to ensure lenders operate transparently and responsibly. The association aims to address consumer protection concerns, promote financial literacy, and increase awareness about digital lending. By doing so, DLAK hopes to patch the few weak links in the digital lending industry.
As an economist, it is essential to acknowledge the significant impact digital lenders have had on Kenya's micro-economy. The informal sector, which contributes significantly to the country's gross domestic product, has benefited greatly from digital lending. With billions of shillings disbursed to under-served borrowers, digital lenders have played a crucial role in stimulating economic growth.
It is, therefore, crucial to have a forum for consumer sensitization to address the concerns of borrowers and promote responsible consumer behavior. By doing so, Kenya can continue to reap the benefits of digital lending while protecting consumers.
The writer is an economist
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