Kenyan president signs law change to regulate digital lenders

FILE PHOTO: A general view shows the Central Bank of Kenya's headquarters building along Haile Selassie Avenue in Nairobi
FILE PHOTO: A general view shows the Central Bank of Kenya’s headquarters building along Haile Selassie Avenue in Nairobi, Kenya November 28, 2018. REUTERS/Njeri Mwangi/File Photo

December 7, 2021

NAIROBI (Reuters) – Kenyan President Uhuru Kenyatta has approved a change in law allowing the central bank to regulate digital lenders, his office said on Tuesday, a move that would allow allows banks to control lenders who violate consumer privacy.

Kenyatta’s office said in a statement that he had signed into law the Central Bank of Kenya’s Bill (Amendment).

“The Central Bank Amendment Act, 2021, gives the Central Bank of Kenya the power to license digital lenders in the country as well as ensure the existence of fair and non-discriminatory operations. discrimination in credit markets,” it said.

This law gives the central bank control of lenders after complaints from borrowers, who can pay annual interest rates above 100%.

The central bank says the number of users of mobile-based micro-lending firms, including Silicon Valley-backed Tala, grew to 2 million in 2019, from 200,000 in 2016. , the central bank said.

To date, dozens of lenders are not covered by any applicable laws.

“This is to give the central bank the power to regulate digital lenders. This is something that is long overdue, that we did it this way and we are looking forward to it becoming law and we ourselves fix the lacuna that has been here for a while,” said Governor Ngan. Central bank Patrick Njoroge told a virtual press conference in late November.

In addition to charging high interest rates, consumers say digital lenders have invaded their data privacy by bombarding the contacts they’ve saved on their cell phones with phone calls. and messages when they default.

Njoroge ruled out using the law to regulate the interest rates that lenders will charge.

“If you mean we have caps, obviously the answer is no. We’re not going to that part of the world again,” he said, referring to the commercial lending rate cap that ran from 2016 to 2019.

(Reporting by George Obulutsa, editing by Ed Osmond) Kenyan president signs law change to regulate digital lenders

Caroline Bleakley

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