NAIROBI, Kenya – Members of Parliament are stepping up efforts to shield Kenyans from exploitative practices by digital lenders.
On Wednesday, November 27, lawmakers reviewed proposals aimed at regulating the sector, which has come under fire for harassment and exorbitant interest rates that have left many borrowers financially strained.
During a session of the Departmental Committee on Finance and National Planning, former MP Lewis Nguyai urged lawmakers to enforce stricter controls on digital lenders.
His submissions were part of the public participation phase of the Business Laws (Amendment) Bill, 2024, a sweeping proposal by the Treasury designed to improve consumer protection and strengthen regulations for manufacturers and investors.
Nguyai emphasized the urgent need for transparency, noting that digital lenders often fail to disclose critical loan terms, leaving borrowers vulnerable to excessive charges and aggressive debt collection tactics.
“There has been a surge in cases where borrowers are subjected to exorbitant and punitive interest rates, arbitrary asset seizures, and unfair borrowing arrangements due to lack of clear and material disclosure,” Nguyai stated.
Among the proposals discussed was a requirement for digital lenders to fully disclose loan terms, charges, debt collection practices, and their handling of personal data.
The recommendations received strong backing from lawmakers. Kigumo MP Joseph Munyoro described the initiative as a critical step in curbing predatory practices.
“What we are trying to do is to anchor digital lending practices in law to address rogue lenders,” Munyoro said.
Committee Vice Chairperson Benjamin Langat echoed this sentiment, highlighting the plight of borrowers who turn to digital lenders as a last resort.
“People who cannot get loans from banks run to digital lenders, who have become extremely exploitative. Regulation is essential to protect vulnerable Kenyans,” Langat said.
Data from the Digital Financial Services Association of Kenya (DFSAK) underscores the sector’s rapid growth.
Digital lenders currently serve over 8 million Kenyans and disburse between Ksh.10 billion and Ksh.15 billion monthly.
However, the rise of unregistered lenders has fueled calls for stricter oversight.
The Central Bank of Kenya (CBK) introduced a licensing framework in 2022 to rein in rogue players, but some unregistered lenders continue to operate despite pending applications.
On Wednesday, November 27, lawmakers reviewed proposals aimed at regulating the sector, which has come under fire for harassment and exorbitant interest rates that have left many borrowers financially strained.
During a session of the Departmental Committee on Finance and National Planning, former MP Lewis Nguyai urged lawmakers to enforce stricter controls on digital lenders.
His submissions were part of the public participation phase of the Business Laws (Amendment) Bill, 2024, a sweeping proposal by the Treasury designed to improve consumer protection and strengthen regulations for manufacturers and investors.
Nguyai emphasized the urgent need for transparency, noting that digital lenders often fail to disclose critical loan terms, leaving borrowers vulnerable to excessive charges and aggressive debt collection tactics.
“There has been a surge in cases where borrowers are subjected to exorbitant and punitive interest rates, arbitrary asset seizures, and unfair borrowing arrangements due to lack of clear and material disclosure,” Nguyai stated.
Among the proposals discussed was a requirement for digital lenders to fully disclose loan terms, charges, debt collection practices, and their handling of personal data.
The recommendations received strong backing from lawmakers. Kigumo MP Joseph Munyoro described the initiative as a critical step in curbing predatory practices.
“What we are trying to do is to anchor digital lending practices in law to address rogue lenders,” Munyoro said.
Committee Vice Chairperson Benjamin Langat echoed this sentiment, highlighting the plight of borrowers who turn to digital lenders as a last resort.
“People who cannot get loans from banks run to digital lenders, who have become extremely exploitative. Regulation is essential to protect vulnerable Kenyans,” Langat said.
Data from the Digital Financial Services Association of Kenya (DFSAK) underscores the sector’s rapid growth.
Digital lenders currently serve over 8 million Kenyans and disburse between Ksh.10 billion and Ksh.15 billion monthly.
However, the rise of unregistered lenders has fueled calls for stricter oversight.
The Central Bank of Kenya (CBK) introduced a licensing framework in 2022 to rein in rogue players, but some unregistered lenders continue to operate despite pending applications.
