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Digital lending apps have grown over the past two years.
However, over the past couple of months, the apps have been accused of numerous flaws, including blatant violation of personal information, harassment, and loans with exorbitant interest rates.
In Kenya, for example, apps have come under scrutiny following mass reports that they are using illegal means to collect loans, such as harassing customers and using their personal information to humiliate them in the purpose of forcing them to pay.
The issue was raised in parliament, and lawmakers began crafting legislation that would completely tame the space.
In 2021, the CBK Amendment Bill was enacted. The bill required the CBK to issue regulations on lending applications by March 23, 2022. The regulations cover aspects of licensing, governance, and credit operations of online lenders.
It also means that in a few days the law will be enforceable. This will imply that the business providing loans online will need to have appropriate policies, procedures and systems in place to ensure confidentiality of customer information and transactions.
There are other regulations on loan collections, including a case where the law cites that agents must not use threats or obscene language when talking to their clients.
In Nigeria, such developments have not been realized. However, the country’s federal government has since freed up its powers to police some lending apps that violated customer privacy.
The apps are:
- Okash
- GoCash
- EasyCredit
- KashKash
- Easy monitoring
- Quick pick
- Sokoloan
The Kenyan case will be interesting to see as there are dozens, probably more loan apps that have infiltrated the space. The apps have been successful in their business, albeit illegal in some cases, thanks to M-PESA which allows them to send money immediately to a lent wallet.
It would not be surprising to see some of them closing up shop given that the regulations are very strict, and would not see them surviving in the market.
