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Kenya licenses 12 more digital credit providers — making it 22

The Central Bank of Kenya has issued digital credit providers' licences to 12 more lenders in the digital loans market, taking the number of licensed digital lenders to 22.

Kenya licenses 12 more digital credit providers — making it 22
Tala, a pioneer member of Digital Lenders Association of Kenya. 

The Central Bank of Kenya (CBK) has published a list of 12 more licensed credit providers in the country, about five months after it said only 10 providers were licensed out of 381 applications.

At the time, CBK said, "other applicants are at different stages in this process, largely awaiting the submission of required documentation". The newly licensed digital lenders include Inventure Mobile Limited (Trading as Tala), Jumo Kenya Limited, Letshego Kenya Ltd, MFS Technologies Limited, M-Kopa Loan Kenya Limited, Mycredit Limited, Natal Tech Company Limited, Ngao Credit Limited, Pezesha Africa Limited, Tenakata Enterprises Limited, Umoja Fanisi Limited and Zanifu Limited.

Unlike the first list, Tala, a member of the Digital Lenders Association of Kenya (DLAK) is also among the licensed providers.

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The aforementioned companies will join the list of 10 other credit providers who were licensed in September 2022—Ceres Tech Limited, Getcash Capital Limited, Giando Africa Limited (Trading as Flash Credit Africa), Jijenge Credit Limited, Kweli Smart Solutions Limited, Mwanzo Credit Limited, MyWagepay Limited, Rewot Ciro Limited, Sevi Innovation Limited and Sokohela Limited.

CBK insist that the licensing and oversight of digital credit providers (DCPs) followed growing concerns by the public “about the predatory practices of the unregulated DCPs, and in particular, their high cost, unethical debt collection practices, and the abuse of personal information.”

In 2021, the Kenyan presidency assented to CBK Amendment Bill, 2021[pdf] which allows the central bank to license and oversight the previously unregulated digital credit providers. According to this Bill, all licensed DCPs are required to disclose their sources of funds and provide evidence of the same.

Although digital lenders are preferred by borrowers across Africa, who are often unbanked and have no access to financing from conventional banking institutions, most of these lenders offer collateral-free loans but they are also high-priced, with some annualised interest rates going up to 876%, according to this report that published findings of the exorbitant and predatory pricing strategies of the Chinese-owned Okash and Opesa loan apps.

This predatory lending has thrived on the continent largely because of poor regulations. In June 2019, about a number of digital lenders in the East African country—not including OKash—created the Digital Lenders Association of Kenya (DLAK) to regulate industry practices. In the association's code of conduct, members are asked to supervise "the activities of external providers of debt collection services" and investigate "reported cases of infringement of consumer rights."

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In Nigeria, the Federal Competition and Consumer Protection Commission, last week, approved the operation of 106 digital lenders in Nigeria. Out of the 106, 65 received full approval, while the other 41 were given conditional approval, according to a list released by FCCPC on Wednesday (Jan. 25, 2022). This decision was reached by the Inter-Agency on Joint Task Force on Digital Lending Apps following their investigations.

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