Digital lenders call for ‘balanced’ regulations

Kenyan digital lenders (Fintech companies) have called for sound and balanced laws and regulations in governing the growing financial sub-sector.

About a dozen members under the Digital Lenders Association of Kenya (DLAK) said Thursday that such a move would not only promote industry best practice and drive a coordinated approach in addressing the emerging industry’s pressing issues, but also help address some of the emerging challenges affecting the now popular industry.

“We will continue to engage with the government on balanced regulations for the sector, and create good practices for industry development. We feel the time is right to give it a voice and promote global best standards and influence how the sector develops while promoting the ethical business practice to the benefit of customers,” said DLAK Chairperson Robert Masinde.

The association now wants regulatory bodies such as the Central Bank of Kenya (CBK), Capital Markets Authority (CMA) to come up with unbiased regulations to govern the sector, rules that are indifferent from how conventional banking and financial institutions are regulated.

He was speaking during the official launch of the lobby group with 12 founding members namely, Tala, Alternative Circle, Stawika Capital, Zenka Finance, MyCredit, Okolea, LPesa, Kopacent, Four Kings Investment T/A Sotiwa, Kuwazo Capital, Mobile Financial Solutions (MFS), and Finance Plan Ltd penning the deal that is further expected to have a defined Code of Conduct in place that requires members to adhere to.

The association was recently incorporated and brings together leading digital-first lenders and other key stakeholders to represent and promote the common interests of digital lenders, consumers, and the digital lending industry.

There is a significant amount of people in Kenya living without a documented financial history. Without that documentation, it has been nearly impossible for banks and other traditional financial institutions to understand and provide credit to these people.

Despite the growing number users of such financial products, challenges such as lack of consumer protection, financial literacy as well as the absence of regulations for non-deposit taking institutions continue to threaten the sector’s growth.

The first DLAK research report is expected to be out soon, whose contents will lay bare the sector’s growth over the years and future outlook as it continues to witness tremendous growth.