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The Unintended Consequences of Kenya’s Unsecured Lending Space

A growing number of borrowers who have faced harassment and debt-shaming by unlicensed digital credit lenders. Philip Ogola, a mental health advocate, says the harassment has left some Kenyans – a number of whom have contacted him directly – severely distressed. Some of them have formed a private support group on Facebook called Loan App Victims Kenya, which has more than 3,000 members. Digital lenders in Kenya still operate largely unchecked. In October last year, the authorities introduced new laws to regulate the industry, but by this September, only 10 out of 288 qualified for a licence from the Central Bank of Kenya after it required operators to submit their documents for consideration this year. More than 80% of Kenya’s adult population uses “mobile money” providers, and digital loan services have become an increasingly important avenue for people to access credit, as many are unable to secure loans through traditional providers such as banks. Digital lending apps require certain permissions upon installation, including access to users’ private information such as their contacts, text messages, location and calendar. They use that data to screen users’ behavioural data and assess their eligibility for loans, but rogue lenders exploit that information when borrowers default, with disastrous consequences.