MPs have kicked off the process of freeing boda boda operators from the jaws of predatory digital lenders.
Three key Bills seeking to amend existing laws governing digital lending have been subjected to public participation to incorporate views of stakeholders from across the country.
The National Assembly’s Finance and Planning committee is driving the process. The proposals seek to free the operators in three crucial Bills; The Tax Laws (Amendment) Bill 2024, The Tax Procedures (Amendment) Bill 2024 and Business Laws (Amendment) Bill, 2024.
The Bills were arrived at after bodaboda operators petitioned the National Assembly to institute regulations into the Buy-Now-Pay-Later (BNPL) credit sector.
The petition was committed to the Finance and Planning Committee, which commenced a probe into the allegations of exploitative lending tendencies.
The ‘Buy Now, Pay Later’ (BNPL) model has flooded Kenya’s lending market, attracting thousands of borrowers with promises of easy access to assets, but often leaving them in worse financial situations.
In May, Kigumo MP Kamau Munyoro, who is a member of the finance committee presented a petition in Parliament, calling for an investigation into BNPL schemes.
Munyoro raised concerns after a constituent lost a motorcycle despite having paid Sh250,000 on a loan worth Sh260,000.
“I questioned how someone could pay so much and still lose the bike. When we summoned these companies, we discovered they operated without proper regulations and set their own interest rates,” Munyoro said.
The Committee is also seeking views on the Business Laws (Amendment) Bill, 2024 that will help reign in unscrupulous lenders with a view to regulating the sector and protect operators who purchase their motorbikes through the BNPL arrangement.
The proposed law provides for consumer protection for borrowers from predatory lenders including setting conditions for micro-lending, financial costs associated with micro-loans as well as the rights and duties associated with micro-loans.
To prohibit illegal non-deposit-taking credit businesses that often expose consumers, the Bill proposes an amendment to the Central Bank Act to require licensing of the providers.
This means all non-deposit taking credit providers previously unregulated will be monitored by the Central Bank which will then enforce a code of conduct.
To enhance the spirit of transparency as required by the law, a non-deposit-taking Microfinance business shall furnish the consumer with accurate information on terms and conditions for lending, the financial costs to be met by the borrower and maintain confidentiality of information relating to borrowers.
In a bid to further bring sanity to the digital lending sector amid heightened efforts by the Office of the Data Commissioner and the Central Bank, the Business Laws (Amendment) Bill, 2024 proposes to make it stiffer for digital lenders to operate.
“In the course of debt collection or loan recovery, a non-deposit-taking microfinance business shall not harass, abuse or oppress a borrower or guarantor, threaten or use violence or use obscene or profane language,” the legislation reads in part.
If the Bill sails through, any lender
who fails to heed to the provisions
will face penalties.
