Debt shaming of borrowers by digital lenders in Kenya has declined by over 70% -ODPC

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Debt shaming of borrowers by digital lenders in Kenya has declined by over 70% -ODPC

Immaculate Kassait -Data Protection Commissioner with Kevin Mutiso during the DFSAK Digital Credit Breakfast in Nairobi. Photo/ Courtesy

Instances of harassment and debt shaming by digital lenders have decreased as a result of collaborative efforts to instill order in the sector. Spearheaded by the Office of the Data Protection Commissioner (ODPC) and the Digital Financial Services Association of Kenya (DFSAK), these initiatives have yielded positive outcomes.

During a sensitization session held at the Serena Hotel in Nairobi to educate lenders on compliance guidance notes, Data Protection Commissioner Immaculate Kassait highlighted a significant reduction in complaints against financial service providers since the Central Bank of Kenya introduced a regulatory framework two years ago.

Recently, the German International Cooperation (GIZ) and Financial Sector Deepening (FSD) jointly sponsored the implementation of guidance notes to aid digital lenders in adhering to regulations, particularly concerning data protection.

“We have been working collaboratively with the ODPC to ensure customer protection. This has led to a significant decline in harassment by over 74 percent. The practice of debt shaming is nearly eradicated, and those who continue to harass customers do so at their own peril,” said Kevin Mutiso, Chairman of DFSAK. “A collaborative approach between regulators and the industry is crucial to achieving
mutually desired outcomes.”

Kenya leads the digital lending revolution in Africa, driven by its high mobile phone penetration rate and substantial unbanked population. Digital lending platforms have emerged as transformative tools, providing financial inclusion and credit access to millions.

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Yet, this dynamic landscape continually evolves, facing challenges and seizing new opportunities amidst a recently implemented regulatory framework. The law mandates digital lenders to maintain records of borrower consent, customer notices, and a data retention schedule for personal data.

Data from DFSAK reveals that digital lenders in Kenya serve 8 million customers and disburse between Sh10 billion to Sh15 billion monthly. According to Central Bank of Kenya (CBK) statistics, 51 digital lenders are licensed to operate in Kenya, with over 500 others awaiting approval for their applications.