Manyatta Member of Parliament (MP) Gitonga Mukunji called for a review of laws and regulations upon which hire purchase procedures operates.
Speaking during a function in Mayatta, Embu County on Tuesday, December 27, the MP noted that the current regulations exposed ordinary Kenyans and startups to the risks of exploitation and slavery in the hands of exorbitant merchants.
According to the MP, hire purchase businesses in Kenya operated in a vacuum as there were no limits on the amount of interest payable to the merchants.
Further, Mukunji raised concerns about a trend where merchants confiscate the property whenever a buyer struggles to complete the hire purchase price as agreed.
The MP noted that he was cognizant of a trend where Boda Boda riders hoping to employ themselves in the industry ended up being enslaved and in some instances lose their partially paid-for motorbikes.
“We have to review the laws because they are punitive to the Boda Boda operators. There is no way we operate with no limit to the amount of interest on some of these items.
If you buy a Boda Boda and are forced to pay back almost 300% of the principal," the MP stated.
In October, Mukunji sounded a warning to hire-purchase merchants selling motorcycles in his county whom he accused of deliberately defrauding Boda Boda operators.
Speaking while addressing a gathering in the county, Mukunji stated that he had received complaints and aid appeals from young operators who had fallen victim to the non-banking financial institutions.
“It's so unfortunate that many times I encounter youths who are Boda Boda operators stranded and pleading for my help after failing to remit the agreed remittances to these rogue non-banking financial institutions that sell motorcycles on hire purchase,” he stated.
If successful, the MP will look to have a law imposing a cap on the hire purchase price payable to prevent cases of extortion of start-ups and other hirers.
This would be in line with Kenya Kwanza's agenda of offering solutions to punitive credit services. Since his inauguration, President William Ruto embarked on a mission to present alternatives to borrowers by offering the Hustlers Fund.
