Kenyans continue to complain of harassment by rogue digital lenders

In 2022, the Central Bank of Kenya (CBK) put in place regulations to govern digital borrowing and lending, in efforts to provide better guidelines and experiences for consumers.

However, as Citizen TV found out, unfair practices still exist among some lenders, while financial literacy also remains key to the sector.

For Lydia Mweru, and many digital loan consumers like her, life has not been easy. As a business owner in Nairobi’s Kayole estate, she explains the struggles she faces since she took her first ever loan from a digital lending platform.

"Nimechukua applications mingi za loan, na zinaniandama nashindwa kulipa. Nikishapata hii, nachukua hiyo napea mwenye alinikopesha ingine. Kitambo huyu mwingine akuje kunidai, nachukua ingine," she said.

The cycle of debts is catching up with her.

"Kila siku ni kudaiwa kudaiwa, kudaiwa, sasa najiuliza, Mungu wangu ntaelekea wapi. Sasa sai niko na msongamano wa mawazo. Nashindwa nifanye nini. Kuna rafiki yetu allikuwa amelazwa hosi kwa sababu ya msongamano wa akili. Lakini tumeshampoteza. Ju ya mashida ya hapa na pale," she added.

Lydia is not alone. Meet her neighbour, Catherine Njiru, a salon owner.

"Wamechukua. Sina anything. Ata hii kiti ni kupewa nimepewa, hii ni kupewa nimepewa. Hii ni nimepewa na hii kampuni ya Rush, kwa sababu ya kutumia products zao. Inapita juu like hiyo simu yangu ni ya Ksh.15,000, wamechukua na deni yangu ilikuwa ya Ksh.7,800. Wamechukua viti nane. Hizo regulations kama Central Bank waliweka…mimi sikujua, ata sijaiskia, ata nimeskia na wewe sai," said Njiru.

These regulations were announced under Legal Notice Number 46 of March 18, 2022 to address the high cost of loans, unethical debt collection practices, abuse of personal information, consumer protection, and the need to govern and monitor the lending practices of digital credit providers.

However, according to the Chairperson of the Digital Financial Services Association of Kenya, there are still a few rogue elements in the system.

"The big issue obviously is on debt collection practices. We have a recent surge by a few rogue lenders who are essentially breaking the law. They are spamming, calling the borrowers’ contacts, which is now expressly stated as illegal by the law,” said Kelvin Mutiso, Chairperson of the Digital Financial Services Association of Kenya.

“We expect the Office of the Data Protection Commissioner will make some comments soon, because they have the precedents of fining digital lenders that break the law."

Mutiso is calling on loan consumers who are harassed by loan recovery agents to report these incidents to the regulator.

"If somebody comes to a customer’s shop, for example, and takes their goods as a result of non-payment, that is usually an illegal shylock. Go to our website, DFSAK, go to complaints, write the complaints, and we will get back to you and direct you how to contact Central Bank," he said.

He adds that customer financial literacy is key.

"What needs to happen is the regulator, the association and the ecosystem need to find a way to educate and teach customers. Those are some of the things that the association is pushing for in the new regulations that are coming out in the near future from the Central Bank," said Mutiso.

"Tunaomba watu wa DFSAK watusaidie, pamoja na serikali, waelimishe watu, watutengenezee mpango wenye utatusaidia kujenga watu kibiashara," added Njiru.