The Digital Lenders Association of Kenya (DLAK), now seeks to influence the coming regulation on digital lending through a legislative lobby. The association was recently formed to address the digital lending challenges in Kenya.
Too much exploitative nature of those involved demands regulation that limit their influence were the reports and claims of the Central Bank of Kenya (CBK) as they raised concerns over the unregulated digital lending issue recently.
From DLAK website reports:
“The organization is to set ethical and professional standards in the industry, which is their main purpose and to work together with policy makers and other stakeholders in addressing industry issues, contribute to knowledge and learning and to work together with the Economic Pillar of the Vision 2030, MTP III and the Big Four Agenda through driving the overall growth of the digital lending and fintech sector.”
List of some of the top digital lenders in kenya with the new association are namely:
• Four Kings Investment T/A Sotiwa
• Kuwazo Capital
• Mobile Financial Solutions (MFS)
• Finance Plan Ltd
• Alternative Circle
• Stawika Capital
• Zenka Finance
• Okolea, LPesa
According to Robert Masinde, the chairperson of the DLAK association said;
“DLAK as a vibrant and diverse digital lending sector has worked hard as it successfully established itself in the country and the time is right and now to give it a voice for the promotion of global best standards. With a mission to promote the ethical business practice to the benefit of customers, DLAK is set to enable digital lenders work together, harmoniously with one voice and promote best practices while influencing how the sector develops”
The Founding Members of the Digital Lenders Association of Kenya (DLAK)
Not withstanding the association’s efforts to set best practices in the unregulated digital lending space in Kenya, CBK still prefers to come up with regulations currently being considered instead of giving the players the chance to regulate things themselves.
Huge interest rates being charged on mobile services being offered has been the issue as the digital lending space is currently unregulated which has resulted in Kenyans being exploited by the players.
Stawi has been introduced to counter this effect. Stawi, which is in partnership with 5 Kenyan banks, offers loans at just only 9 percent per annum when compared to some mobile lenders who charge up to 300% in some cases as interest rate.
The CBK has launched Stawi, a loan facility for micro, small, and medium enterprises in Kenya.
Speaking further on the needed regulation, the CBK governor, Patrick Njoroge has this to say:
“This is why you need to have regulation that is based on specific principles most important being the protection of Wanjiku.”
According to Hilda Moraa, CEO of a platform that connects lenders and borrowers in Kenya called Pezesha also said that only very few lenders are pushing for education in the space , rather many of them only focus on disbursing loans and growing their customer base “We actually need normalization and sanity in the credit space.”
Though digital lending has no doubt contributed to financial inclusion in Kenya, Some however argue that this has come at a cost to the borrowers who spent much interest in the cause of the transactions.
As mobile lending evolves, we’re also seeing the emergence of crypto credit which is in no doubt only going to increase as crypto adoption gets strongly rooted in our system.
The crypto credit space which is already on the move will no doubt offer better lending services due to the transparency, global, and permissioned offerings that come with it as a result of the way it’s being structured.
Credit: C. David
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