Mathare MP says that mobile money lenders should be shutdown.
Mobile money lenders are a social menace and Parliament should probe them, Mathare MP Antony Oluoch said Wednesday.
In his petition to the Assembly, the lawmaker claimed that lenders such as Tala, Mshwari, Fuliza, KCB M-Pesa, Absa, Branch, Shika, Ipesa, Berry, Okash and Zenka are unregulated.
Lenders to be reviewed.
Oluoch wants the National Assembly, through the departmental committee on Finance and National Planning, to probe them with a view to closing down those that are operating outside the set regulations.
According to the MP, the lure of easy borrowing had led many people to their graves through suicide after being unable to repay the loans. He said families have also been broken and the number of loan defaulters keeps rising by the minute.
It’s become a social menace:
The digital borrowing has become a social menace responsible for suicides, divorces, family break-ups and increased listing of loan defaulters by the Credit Reference Bureau (CRB).
Oluoch cited a recent report by Credit Reference Bureau (CRB) that shows more than 2.7 million Kenyans have been blacklisted for defaulting on loans.
The lenders lure and trap borrowers into unnecessary borrowing and a vicious cycle of expensive loans by raising loan limit upon repayment of the initial loan.
Worryingly still, a recent survey conducted by Kenya National Bureau of Statistics (KNBS) revealed that 40 percent of the mobile borrowers have multiple loans from at least six out of the 10 top lenders.
Exploitative interest rates.
Oluoch further accused the mobile lenders of exploitative interest rates, which he claimed were as high as 19 per cent way above the 13 percent recommended by Central Bank.
Considering mobile lenders are not recognised as financial institutions under regulation and supervision by CBK under the Banking Act, they operate bereft of regulation, including tax obligations.
Infringement of privacy.
Due to lack of regulation, mobile money lenders infringe on clients’ right to privacy by accessing customers’ contacts to call friends and family about the borrowers’ debt status.
Oluoch wants the House to direct both CBK and Communication Authority of Kenya to audit digital money lending, including provisions for full disclosure of involved upfront charges and applicable interest rates.
I pray that the National Assembly, through the Committee on Finance and National Planning, investigates the operations of all mobile money lending platforms in the country with a view to stopping unregulated money lending and subjecting non-compliant mobile lenders to applicable lending regulations.
The petition was received by Speaker Justin Muturi and committed to the Finance Committee.