Shylocks or Legitimate Lenders? An Inquiry into the Regulation of Digital Lending in Kenya

Abstract

The lending market in Kenya has seen a proliferation ofdigital lenders that are largely unregulated. The lendersprovide seemingly cheap loans whose interest is hugewhen the Annual Percentage Rate (APR) is calculated.The lenders operate through apps that are uploaded toApp Stores and pulled down at will. They require theircustomers to ' accept ' terms and conditions beforeaccessing the loans, and these terms sometimes allowthe lenders unfettered access to customer data whichthey use and abuse in equal measure. The lenders usesuch customer data to threaten, to contact those on thecontact lists of the customers ' phonebook, and to reportthem on Credit Reference Bureaus (CRBs).This paper seeks to examine the law on regulation of thedigital lending environment in Kenya and to recommendthe enactment of the Financial Markets Conduct Bill of2018 which introduces elements of the Twin Peaksmodel of financial regulation.Key Words: Shylocks; digital lenders; data privacy; AnnualPricing Rate (APR); digital regulation; Twin-PeaksModel