- Rozaah Buyu proposes a bill to protect borrowers from predatory microfinance lending.
- The bill seeks to cap interest rates and curb unfair debt recovery practices.
- Non-compliant lenders could face penalties or licence revocation.
Kisumu West MP Rozaah Buyu has written to the Speaker of the National Assembly proposing a bill that would tighten protections for Kenyans who borrow from non-deposit taking microfinance businesses, citing rising cases of exploitation through punitive interest rates.
In a letter dated August 13, 2026, addressed to Speaker Moses Wetangula, Buyu asked for assistance in preparing a bill to amend the Microfinance Act, Cap. 493C. The MP, who sits on the Blue Economy and Irrigation Committee and the Administration and Internal Affairs Committee, said she was invoking Standing Order 114 to move the amendment and had attached a draft bill for the Speaker’s reference.
Buyu noted that the Business Laws (Amendment) Act, 2024 had already amended the Microfinance Act to strengthen consumer protection for borrowers dealing with non-deposit taking microfinance businesses. However, she argued that despite section 53 of the Act, the changes have not been enough to shield ordinary Kenyans from exploitation.
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According to the letter, there has been growing public outcry over how borrowers are treated by shylocks charging punitive interest rates on loans and credit. Buyu said this has included degrading treatment, harassment and outright exploitation.
She further pointed to a rise in cases where borrowers have been arbitrarily deprived of their property, had their financial obligations disclosed to third parties without consent, and been drawn into unfair borrowing arrangements involving excessive interest that lacks proper disclosure.
Beyond section 53, she said, non-deposit taking microfinance businesses remain largely unregulated, leaving the law unable to address these public concerns.
To respond to these gaps, Buyu is proposing several amendments to the Act. Lenders would be compelled to give full and material disclosure of charges and loan terms, so that borrowers understand the consequences of any borrowing arrangement before signing on.
Borrowers would also be protected from arbitrary debt recovery, since lenders would be required to follow court procedures set out in the Civil Procedure Act rather than recovering debt on their own terms.
Lenders would additionally be required to give reasonable notice before recovering debt or exercising the right of lien, and a cap would be placed on the maximum amount recoverable on a non performing loan.
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The bill also seeks to shield borrowers from predatory attempts by lenders to collect punitive and excessive interest above the principal amount, while extending the same protection to borrowers who had existing loans before the Act was enacted.
To enforce compliance, the proposal would introduce penalties and allow for licence revocation against non-deposit taking microfinance businesses that fail to meet consumer protection requirements.
Perhaps most significantly, it proposes capping punitive monthly interest by pegging the annual rate at no more than three percentage points above the prescribed Central Bank Rate.
By Benedict Aoya
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