In recent years, Kenya’s digital lending industry has seen a surge in popularity and growth, with numerous players entering the market.
However, this growth also brought about concerns about the unregulated nature of the industry and the exploitation of vulnerable borrowers.
This led to the implementation of the Digital Credit Providers regulations by the Central Bank of Kenya, which mandated digital lenders to obtain a license to operate.
In response to this policy, Google has taken down hundreds of loan apps from the Play Store in Kenya since January, when its new policy requiring digital lenders to submit proof of license came into effect.
Although it is uncertain how many apps have been blacklisted, a quick spot check shows that almost 500 apps previously in the Finance category on the Play Store, including MoKash, Okash, TruePesa, EasyCash, Senti, among many others have been taken down.
Before the DCP regulations were enforced, many credit apps would offer quick, unsecured personal or business loans, charge exorbitant interest rates, apply debt-shaming tactics to recover their money, and share customer data with third parties, taking advantage of the lack of regulations and the Play Store’s slack vetting process.
The regulations, meant to weed out rogue players, also require loan apps to observe consumer privacy and data protection rights, as well as anti-money laundering laws. Furthermore, they must disclose the terms and pricing of loans to customers before approval and disbursement.
As of January, only 22 digital lenders out of the 381 that applied had received a license, according to the Central Bank of Kenya.
These included Tala, a PayPal-backed loan provider; Pezesha, a B2B embedded lending platform; and Jumo, which provides financial services, including lending.
Google requires loan apps awaiting a license to submit a declaration form attesting that approval is pending in order to obtain interim approval, which will be valid for 45 days, to be listed on the Play Store.
This move by Google highlights its commitment to ensuring compliance with local regulations and protecting consumers from predatory lending practices.
While it is a significant step in the right direction, there is still a need for further regulation to ensure that vulnerable borrowers are protected from predatory lenders and that the digital lending industry operates in a fair and transparent manner.