In a move to save boda riders from predatory digital lenders, the National Assembly Committee on Finance has drafted three Bills that seek to amend existing laws governing digital lending.
The proposals that are currently undergoing public participation include the Tax Laws (Amendment) Bill 2024, the Tax Procedures (Amendment) Bill 2024, and the Business Laws (Amendment) Bill, 2024.
The Bills were drafted after boda boda operators petitioned parliament to impose stringent measures to regulate the Buy-Now-Pay-Later (BNPL) credit sector.
Bodaboda operators wrote a demand letter to the Finance Committee, which commenced an immediate probe into the allegations of exploitative lending tendencies.
Following the probe, the Committee came up with the Bills which include the Business Laws (Amendment) Bill, 2024, which seeks to impose regulations on unscrupulous lenders and protect operators who purchase their motorcycles through the BNPL arrangement.
The proposed law provides for consumer protection for borrowers from predatory lenders, including setting conditions for microlending, financial costs associated with microloans, as well as the rights and duties associated with the loans.
To prohibit illegal non-deposit-taking credit businesses that often expose consumers, the piece of legislation proposes an amendment to the Central Bank of Kenya (CBK) Act to require licensing of the providers.
By this, 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 transparency, the non-deposit-taking microfinance business offering lending services to boda riders will be required to furnish their clients with accurate information on terms and conditions for lending.
The microfinance business will also be required to outline the financial costs to be met by the borrower and maintain the confidentiality of information provided to them during the agreement.
Additionally, the Business Laws (Amendment) Bill, 2024, also seeks to enhance sanity in the sector by heightening regulatory measures by the Office of the Data Commissioner and CBK to make it stiffer for digital lenders to operate.
According to the Bill, in the course of debt collection or loan recovery, a non-deposit-taking microfinance business shall not harass, abuse, or oppress a borrower, threaten or use violence, or use obscene or profane language.
