Central Bank of Kenya (CBK) has expressed concerns over the lack of regulation in the digital lending space.
Speaking at a press briefing on Thursday, CBK Governor Dr. Patrick Njoroge said mobile lending apps have become predatory comparing them to shylocks on the high interest rate they charge.
“The issue has been there for a while, they prey on individuals and you can’t blame people for taking the loans, maybe out of desperation,” said Dr. Njoroge.
The CBK boss pointed out that the mobile-app lenders charge interest rates on loans at their own discretion, adding that while there is need for them to be regulated, the law does not provide for a clear regulator in the sector.
“There has to be a law in place to regulate these apps but how or who regulates them is anyone’s guess,” he said.
A recent report from FSD Kenya indicated that 29 per cent of mobile phone users in Kenya have borrowed from M-Shwari with 49 loan apps in the country.
This is followed by KCB-M-Pesa at 12%, Equity Eazzy at 4%, Tala at 1.8 %, and MCo-op cash at 1.3 %.
Equity bank, Kenya’s second-largest bank, has revealed that 96% of all its transactions are happening outside the branch during the release of its 2018 financial year results.