Johannesburg – Rogue mobile lenders are robbing Kenyans by taking advantage of the regulatory vacuum to extort cash and personal data from unwitting users, according to a recent study conducted by the government’s Financial Sector Deepening (FSD) and the Bill and Melinda Gates Foundation.
The study which explored 110 digital credit products found that dozens of mobile lending apps, which often set arbitrary fees and regularly malfunction, are operating with virtually no regulatory controls, the Standard reported on Tuesday.
Half of the digital credit products explored could not be accessed largely due to the instability of the apps or sign up fees with dozens of them disappearing after harvesting users’ data.
These developments come as a growing number of Kenyans are taking to mobile loans for their credit needs, with pressure mounting on the Central Bank of Kenya (CBK) and the National Treasury to come out with a regulatory framework for the rapidly growing sub-sector.
Several banks in Kenya with large loan books, including Equity Group, KCB Group and NCBA now process the bulk of their loans via mobile phones. They also use online banking, with fewer customers visiting the physical branches.