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Recently, the governor of the Central Bank of Kenya, Patrick Njoroge, noted that the risks to Kenyans showed that it was necessary to regulate the burgeoning digital credit sector.
Although many of these small digital credits are extremely valuable to people facing emergency situations, they manage liquidity problems or they are the object of of small-scale transactions, they deserve our full attention
. However, the three largest digital credit lenders (M-Shwari, EazzyLoan and KCB-M-PESA) are Kenyan entities.
It is fair to say that In Kenya, as in many other African countries, the development of digital credit was sponsored by international development agencies
and this was done with good intentions, with little foresight. amount of loans issued without reference to their quality is alarming.
There is growing evidence that a disturbing proportion of these digital credits served to fund the sports betting epidemic that sweeps the Perhaps as a result, a recent study noted that default borrowers on one-third of undergraduate loans and are listed negatively on credit reference offices (BRCs). 19659002] By March 31, 2017, about 10 percent of Kenya's adult population was negatively rated on the CRB – close to one million of them for amounts less than Sh1,000.
More than a year later, the number of people listed negatively exceeds 3.5 million.
Many remain listed negatively because of the Sh2.200 required for a clearance certificate to remove their names from CRB lists.
There has been a lot of discussion of the interest rates badociated with these loans.
The actual interest rates for many are even higher than those published by many lenders. This is because many borrowers (eg day traders) repay well before the monthly loan term.
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