Kenya's finance ministry has unveiled a draft of the country's first bill regulating digital lenders, Reuters reported May 25.
Geoffrey Mwau, director general of budget, fiscal and economic affairs at the treasury, reportedly told journalists May 24: "We have a lot of predatory lending out here, which we want to regulate."
Kenya is a pioneer of financial inclusion by being at the forefront of enabling individuals to transfer money and make payments using mobile phones and bypassing banks. Off the back of that success grew mobile lenders able to charge sky-high interest on their loans, sparking perilously high debt levels among their clients over the past few years, Reuters reported.
With such lending falling outside the remit of regulators, banks and other lenders have been able to avoid a government interest rate cap of four points above the central bank’s benchmark interest rate, Reuters wrote.
According to a separate Reuters report from May 29, the governor of the Central Bank of Kenya, Patrick Njoroge, voiced his concerns about proposals to tighten financial services regulation, adding that the rules do not address commercial lending rates.
"The bill emasculates the central bank. CBK is under attack," he reportedly said in a press conference.
