Google requires credit apps in Kenya to provide proof of license to operate in the country or they risk being removed from the Play Store, its digital distribution service. Those who have applied for licensing from the Central Bank of Kenya and can prove it can also be spared.
Google’s action has been slow, however, and came two months after the Digital Credit Providers Regulations went into effect to protect borrowers from fraudulent apps, many of which engaged in predatory lending practices and debt-damaging tactics to get their money back.
New and old loan apps in Kenya are now expected to submit the required documents and information, or face banning at the end of January next year after similar actions in India, Indonesia and the Philippines.
“Developers with personal loan apps targeting Kenyan users need to graduate [a] Declaration form and submit required documentation before posting their personal loan app… Personal loan apps operating in Kenya without proper declaration and license attribution will be removed from Play Store,” Google said in a policy update, which also Apps in Nigeria require Federal Competition and Consumer Protection Commission (FCCPC) “verifiable letter of approval”.
The FCCPC rules, which came into effect in August this year to protect borrowers, while less stringent than Kenya’s new law, require lending apps to disclose their fees and show how they receive feedback and resolve complaints, among other things .
Kenya and Nigeria are major tech hubs in Africa and have seen the proliferation of lending apps offering quick unsecured personal loans of up to $500. However, the lack of strict regulations and the sloppy verification process of the Google Play Store have attracted rogue operators, forcing the authorities to take appropriate measures to protect citizens.
In Kenya, only 10 of the 288 lending apps that have applied for licenses from the country’s central bank have been approved. Some of the most popular, like Zenka and Silicon Valley-Backed Tala, have yet to be licensed.
Digital lenders in Kenya are expected to avoid the use of threats or debt-damaging measures, including posting personal information on online forums, unauthorized calls and messages to customers, and accessing their contact lists to contact them in the event of a payment default to contact .
Lending apps collect borrowers’ phone details, including contacts, and require access to Messages to review mobile money transaction history – for credit checks and as a condition of loan disbursements. Fraudulent lenders have shared some of the collected contact information with outside collection agencies.
Nice, 40 loan apps in Kenya are under investigation by the Office of the Data Protection Commissioner for data breach, following complaints from users.
The new law will require lending apps to also disclose their pricing model and terms and conditions to consumers upfront, unlike in the past when they were unsupervised.
Apps are also expected to notify the regulator before introducing new products or making changes to existing products, as well as disclosing and demonstrating their funding sources.