Business stakeholders led by former legislator Lewis Nguyai have called on parliament to come up with stringent measures to cushion Kenyans who access loans from predatory digital lenders.
Speaking when he appeared before the Departmental Committee on Finance and National Planning to make his submissions on the Business Laws (Amendment) Bill, 2024 the former MP said non-deposit taking Microfinance institutions, have far too long remained unregulated
He said there has been increase in cases of borrowers being arbitrarily deprived of their property and entering into unconscionable and unfair borrowing arrangements which are characterized by exorbitant, punitive and excessive interest rates that do not give material disclosure.
“As you are aware, Articles 31, 40 and 46 of the Constitution espouses the right to privacy, the right to property and consumers rights, respectively”, he stated. He called on the Committee to institute stringent measures to ensure consumer protection.
Nguyai urged the committee to adopt his proposal seeking to obligate lenders to give full and material disclosure of the charges and terms relating to the loans so that borrowers are fully aware of the consequences of the borrowing arrangement.
Further he proposed amendment of the bill to protect borrowers from the predatory tendencies of the lenders to arbitrary recover debt on loans by subjecting the loan recovery process to the procedures envisaged in the Civil Procedure Act
“ By inserting the following new subsections immediately after subsection (2)- (2A) a non-deposit taking microfinance business shall comply with the requirements of Article 31 of the Constitution and the Data Protection Act in lending loans and recovery of debts”, he proposed.
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He submitted that this provision would protect the borrower’s right to privacy and unnecessary disclosure of sensitive information by obligating lenders to comply with provision of the Constitution and the relevant law on data protection.
Nguyai further proposed that the law be amended to provide that a non-deposit taking microfinance business issues adequate notice to a borrower of its intention to recover a debt.
Kigumo MP Joseph Munyoro whose request for a statement on the matter and the subsequent inquiry by the Committee occasioned this amendment, welcomed the proposal underscoring the need to slam the brakes on rogue lenders.
“This proposal is very welcome. What we are trying to do is to anchor digital lending practices in law so as to address rogue lenders,” he noted.
Butula MP, Joseph Oyula, supported the proposal noting that it would help a lot of people in the informal sector especially those in the boda boda sector, borrow at predictable rates.
His sentiments were echoed by the Committee’s Vice Chairperson Benjamin Langat who noted that there is need to create order within the digital lending sector.
Langat said people who cannot get loans from banks run to digital lenders who have turned out to be very exploitative and there need to regulate these digital lenders to cushion such people from exploitation.
By Obegi Malack
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