The Kenyan central bank has licensed 12 digital lenders, bringing the total number of digital lenders in the East African country to 22. The Central Bank of Kenya (CBK) has released a list of 12 more approved credit providers in Kenya.
Inventure Mobile Limited (trading as Tala), Jumo Kenya Limited, Letshego Kenya Limited, MFS Technologies Limited, M-Kopa Loan Kenya Limited, Mycredit Limited, Natal Tech Company Limited, Ngao Credit Limited, Pezesha Africa Limited, Tenakata Enterprises Limited, Umoja Fanisi Limited, and Zanifu Limited are among the newly licensed digital lenders.
This comes around five months after it was announced that only ten providers were licensed out of 381 applicants.
According to CBK, the licensing and regulation of digital credit providers (DCPs) were prompted by growing public concern “about the predatory practices of the unregulated DCPs, particularly their high cost, unethical debt collection practices, and abuse of personal information.”
The Kenyan presidency signed the CBK Amendment Bill, 2021, in 2021, allowing the central bank to license and supervise previously unregulated digital credit firms. This bill requires all licensed DCPs to disclose their funding sources and produce evidence of the same.
Although digital lenders are preferred by borrowers across Africa, who are often unbanked and have no access to financing from traditional banking institutions, most of these lenders offer collateral-free loans, but they are also expensive, with some annualized interest rates reaching 876%, according to this report that published findings of the Chinese-owned Okash and Opesa loan apps’ exorbitant and predatory pricing strategies.
Because of lax rules, predatory lending has proliferated on the continent. In June 2019, a group of digital lenders in Kenya, including OKash, formed the Digital Lenders Association of Kenya (DLAK) to regulate business standards. In the association’s code of conduct, members are asked to supervise “the activities of external providers of debt collection services” and investigate “reported cases of infringement of consumer rights.”