CBK and Parliament must Crackdown on Digital Microfinance (mobile lenders).
CBK AND PARLIAMENT MUST CRACKDOWN ON DIGITAL MICROFINANCE (MOBILE LENDERS)
The Central Organization of Trade Unions (Kenya), COTU (K), has received countless petitions from Kenyans, most of them being our members, on the exploitation being meted against them by digital microfinance institutions.
In the name of ‘financial inclusion, the digital microfinance institutions, and by extension mobile lenders, have continued impoverishing Kenyans by imposing draconian interest rates on their credit facilities. This, in no uncertain terms, is daylight robbery practised by institutions that, in their DNA, are supposed to be helping the poor and small businesses grow. On the flip side, these digital microfinance institutions have not only made the average Kenyan poorer but also killed businesses by making it harder for them to access further credit and eating into their small profits.
With most banks having their interest rates between 12% to 14% per annum, most of the digital lending facilities have interest rates of between 70% to 500% per annum. Just to mention a few, Fuliza by Safaricom, which has pushed many Kenyans into owning more than one sim card from the same mobile operator, has an interest rate of 1% per day and more than 360% p.a. Other mobile lenders have an interest rate of 25% after every two weeks while others 33% for every week. This is ridiculous and unacceptable and no amount of ‘risk factor’ can substantiate this kind of banditry.
COTU (K) would like to call upon the Central Bank of Kenya to move with speed and save Kenyans from the digital microfinance institutions that are exploiting Kenyans left, right and centre. We would like to remind the CBK Governor, who is a practising Christian, that if anything, the conduct of the digital microfinance institutions in Kenya is not only illegal but also ungodly. It is immoral for anyone to take advantage of the tough financial situations that Kenyans are going through to reap maximum benefits.
We equally call upon parliament to come up with sound legislation, on the above subject matter, so as to facilitate the crackdown on the rogue digital microfinance sector in Kenya.
Dr. Francis Atwoli, NOM (DZA), CBS, EBS, MBS