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

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.

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.

Brian Okinda

Recent Posts

KCB customers withdraw $7.7 million due to system glitch during migration

A system malfunction during a key data migration allowed customers at KCB Group, Kenya’s largest…

2 days ago

Mozambique social media restricted as runner-up in hiding

Mozambique's social media platforms have been restricted as Venâncio Mondlane, a main opposition figure in…

2 days ago

Young Africans turn to smartphones to expand access to sexual and reproductive health

Young Africans are leveraging smartphones and social media to advocate for improved sexual and reproductive…

2 days ago

Binance has announced a strategic partnership with Amazon Web Services (AWS) to harness generative AI

Binance, the world's largest cryptocurrency exchange by user base and trading volume, has announced a…

2 days ago

Mastercard and Diamond Trust Bank 10-year deal to boost digital payments in East Africa

Mastercard and Diamond Trust Bank (DTB) have signed a landmark 10-year agreement aimed at accelerating…

2 days ago

Kenya’s smartphone imports set to decline in 2025 due to stricter regulations

Kenya is bracing for a significant reduction in smartphone imports starting in 2025, following the…

2 days ago