Financial agencies warn Kenyans against rise in fake mobile loan apps

More than one in four Kenyans has taken a digital loan

The agencies, including Central Bank of Kenya, Capital Market Authority, Insurance Regulatory Authority, Ministry of Trade, Retirement Benefits Authority and Sacco Societies Regulatory Authority expressed concern over the increasing number of unlicensed and unregulated financial products.

“Some of these products require payment of a registration fee," the regulators said in a joint statement.

They also noted that some of them require members of the public to save before qualifying for a credit facility.

“They promise unusually high returns with little or no risk or without disclosing the related risks.

Convenience

More than one in four Kenyans has taken a digital loan highlighting the central role mobile lending applications play.

A report by the Financial Sector Deepening (FSD) Kenya, the Central Bank of Kenya and the Kenya National Bureau of Statistics shows Kenyans turn to the digital micro-loans mainly for short-term working capital due to their convenience.

Even then, while the popularity of lending apps represents a tremendous step for formal financial inclusion, FSD says more research is needed to understand the real socio-economic impact of digital credit on low-income Kenyans.

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