The National Assembly Committee on Finance and National Planning has initiated a process to craft a new proposed law that if passed, it would shield boda boda operators from the jaws of predatory digital lenders.
This is after three key Bills that are seeking to amend existing laws governing digital lending were subjected to public participation to incorporate views of stakeholders from across the country.
The proposals seeking to free the operators are contained in three crucial Bills; The Tax Laws (Amendment) Bill 2024, The Tax Procedures (Amendment) Bill 2024 and Business Laws (Amendment) Bill, 2024.
This comes at a time some of the lenders have been cited for fraud and professional malpractices.
For example, in our earlier exposé, we revealed how Mogo Microfinance (Mogo Auto Limited), a Kenyan subsidiary of the global financial technology firm, Eleving Group, a vehicle purchasing and access to financial solutions entity projected as a predatory shylock-like lender is embroiled in massive financial fraud claims and heaping complaints of overcharging clients for loan facilities obtained.
In a blow by blow account of complaints formally lodged with the Competition Authority of Kenya (CAK) and a barrage of similar grievances raised by frustrated and aggrieved Mogo Microfinance clients bear consistent grumbles of exaggerated claims, overcharging and charging repayment of loan facilities obtained in US Dollars despite having obtained in Kenya Shillings.
In one of the complaints registered with the CAK on April 8, 2023 and seen by The Informer Media Group, one of the complainants, despite having made monthly repayment for seven months, when he requested for the balance to clear the loan facility, the amount issued was higher than the principal amount obtained.
Last month, Competition Authority of Kenya (CAK) slapped Mogo Microfinance (Mogo Auto Limited) a Kenyan subsidiary of the global financial technology firm, Eleving Group, a vehicle purchasing and access to financial solutions entity projected as a predatory shylock-like lender with a fine of Sh10.85million over false or misleading representation and unconscionable conduct against its customers.
The authority further ordered Mogo to refund three customers Sh344,939, which was paid in excess of repayment of their loans and the difference in the dollar exchange rate applied during the loan issuance.
The regulator also directed Mogo to refrain from misrepresenting facts and engaging in unconscionable conduct when dealing with its clients.
Back to the proposed laws, the three Bills were arrived at after boda boda operators petitioned the National Assembly to institute regulations into the Buy-Now-Pay-Later (BNPL) credit sector.
The petition was committed to the Finance and National Planning Committee which commenced a probe into the allegations of exploitative lending tendencies.
The Business Laws (Amendment) Bill, 2024 will help reign in unscrupulous lenders to regulate the sector and protect operators who purchase their motorbikes through the BNPL arrangement.
The proposed law provides for consumer protection for borrowers from predatory lenders including setting conditions for micro-lending, financial costs associated with micro-loans as well as the rights and duties associated with micro-loans.
To prohibit illegal non-deposit-taking credit businesses that often expose consumers, the Bill proposes an amendment to the Central Bank Act to require licensing of the providers.
This means 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 the spirit of transparency as required by the law, a non-deposit-taking Microfinance business shall furnish the consumer with accurate information on terms and conditions for lending, the financial costs to be met by the borrower, and maintain confidentiality of information relating to borrowers.
In a bid to further bring sanity to the digital lending sector amid heightened efforts by the Office of the Data Commissioner and the Central Bank, the Business Laws (Amendment) Bill, 2024 proposes to make it stiffer for digital lenders to operate.
It says: “In the course of debt collection or loan recovery, a non-deposit-taking microfinance business shall not harass, abuse or oppress a borrower or guarantor, threaten or use violence or use obscene or profane language.”
If the Bill sails through, any lender who fails to heed to the provisions will face penalties.
