Digital lenders in Kenya support a plan for the central bank to regulate their industry amid concerns they are placing borrowers under increasing debt stress.
Regulations should be based on the digital lenders’ code of conduct, the Digital Lenders Association of Kenya said in a statement in the Nairobi-based Star newspaper on Monday. The lobby group wants to promote transparency, best practices for debt collection, market-based pricing with no hidden fees, it said.
Kenya is among the first countries where digital lending, mostly using a mobile phone, went mainstream. The pioneering lenders came under the spotlight following complaints of exorbitant interest rates and bad collection methods. With dozens of apps offering short-term advances similar to payday loans, people who once borrowed mainly from family and friends are now being bombarded with ads for quick money and calls from debt collectors.
The digital lenders are largely unregulated and there are no caps on interest rates, except those backed by banks that are supervised by the Central Bank of Kenya. In April, the central bank, which wants all the lenders properly supervised, blocked unregulated loan companies from some credit-reference services after public complaints that some firms were misusing information.