It is not just the betting firms in trouble, mobile loans lenders are also on the spot
There has been a heated debate concerning the existence of mobile loans lenders over the past few weeks. As we speak there are more than 300 mobile loans apps operating in Kenya. The leading mobile loans apps include Branch, Tala and Okash. The conflict has been on how these mobile loan apps are operating. It is known that these mobile loans apps are unregulated according to the CBK Governor Dr. Patrick Njoroge. The CBK Governor has insisted that they are not allowed to operate in Kenya thus considered illegal.
The CBK Governor Dr.Njoroge warned the Kenyan citizens about committing to these online lenders. This was after a series of complaints about interest rates that were being charged by the lenders. There was a concern that the online lenders were exploiting consumers. The CBK always strive to shield its citizens from such practices. To put their heads out, the online lenders formed an association of online lenders. With their chairman Mr.Robert Masinde they formed Digital Lenders Association of Kenya. Mr.Masinde claimed that they had to fight for their place and that DLAK will be self-regulated.
The CBK Governor termed the move useless. Any lending institution must adhere to the principles set aside by the CBK. So it should be treated as the other lending institutions to avoid conflict of interest. The CBK Governor went ahead and said there is nothing as such as self-regulation. Yesterday the CBK Governor appeared in front of the senate ICT committee. When the issue of online lenders was raised, he replied by saying that they assist in money laundering. According to the CBK Governor he had an issue on source of funds for these institutions. In his reply he said that these online lenders are prone to illicit money laundering. Thus must be regulated or shut down from the market.
All this is left to the CBK because there is no other body mandated to regulate all lending institutions. I don’t know the future of these online lenders where they will continue operating in Kenya or not. The digital lenders have so far faced a lot of pressure. Much pressure has been from CBK, which I have no clue whether they will be able to withstand it. I guess will find out very soon.