Digital mobile apps were on Tuesday, December 1, put on the spot by senators who questioned why they were allowed to operate without proper regulations.
The Finance and Budget Committee claimed that failing to regulate the digital lenders has resulted in high and unchecked lending interest rates of up to 40 percent.
The committee also faulted the Central Bank of Kenya (CBK) governor Patrick Njoroge for saying that the government needed to enact a law to regulate digital lenders.
“This country allows people to use digital apps unregulated. They don’t pay taxes. It looks like Kenya is a criminal enterprise…it’s a criminal haven for people who want to do digital crimes," Makueni Senator Mutula Kilonzo stated.
The CBK governor assured that the bank would come up with regulations once the bill was passed.
"I must say the matter is urgent and I think you are the people that see it more than us because I am sure people have come to you seeking redress from the damage that has been caused (by the unregulated industry),” the governor stated.
In recent years, the mobile loan app industry has skyrocketed, with more than one hundred registered digital lenders in Kenya.
Pundits have remained divided on whether such applications are welcome credit-lines for the people or well-disguised traps.
High-interest rates are often cited by proponents of stricter regulation of the industry as well as debt shaming.
In June, Bonchari MP Oroo Oyoika introduced a bill at the National Assembly which observed the lack of a legal framework to control the operations of digital credit providers and challenged the Central Bank of Kenya (CBK) to regulate the services.
In Oyoika's proposal, CBK is tasked with regulating digital financial products and services to ensure fair access to credit.