Mobile lending to surge on back of new laws
By People Reporter, February 20, 2020
Increased uptake of mobile loans could boost the country’s economic growth despite regulatory upheavals in the region.
Part of that growth, economists and industry players believe, will be influenced by the growing number of mobile loan borrowers majority of whom are Small and Medium enterprises (SMEs).
Jijenge Credit Ltd chief executive Peter Macharia says mobile loans will continue to make the difference to the underserved class by conventional banks and believes that this trend is likely to carry on.
“I expect the momentum to carry on this year because of several factors especially regulatory reforms and the fact that more Kenyans have embraced this form of digital payments despite the existing challenges the industry continues to face,” says Macharia.
He made the remarks on the back of recent revelations by Central Bank of Kenya’s Deputy Governor Sheila M’Mbijjiwe last week that a middle-aged man took his life following public shaming by an undisclosed digital lending application.
Harassment
The regulator has previously raised concern over the growing and disturbing tales by victims of harassment by some digital lenders and as a result the deputy governor said the institution together with Treasury, were preparing a law that is expected to cover digital mobile lenders in an effort to restrain their exorbitant monthly interest rates – which rise up to 520 per cent when annualised, leading to mounting number of defaulters now listed with credit reference bureaus (CRBs).
Figures from CRB Kenya show that as of March 2019, there were more than 19 million Kenyans mobile loan borrowers with 40 per cent of this number having loans from at least six out of the 10 existing mobile money lending services.