Several mobile apps in Kenya have suspended operations in Kenya and are no longer lending, following a recent directive by the Central Bank of Kenya (CBK) to deny them access to Credit Reference Bureau (CRB) services.
Early this week, CBK withdrew the approvals granted to unregulated digital (mobile-based) and credit-only lenders as third party credit information providers to CRBs. The withdrawal was in response to numerous public complaints over misuse of the Credit Information Sharing System (CIS) by the unregulated digital and credit-only lenders, and particularly their poor responsiveness to customer complaints. Thus, unregulated digital and credit-only lenders will no longer submit credit information on their borrowers to CRBs.
Prior to the announcement that was issued on April 14, few mobile apps had already suspended their operations without informing their customers, by denying them loans like the OKash. Others reduced the loan limits for their customers, such as Zenka.
Branch and Tala was also in line denying customers loans, without offering an explanation to the move.
In a bid to oil negotiations between them and the CBK, digital lenders affiliated to the Digital Lenders Association (DLAK), which represents 17 major digital lenders in the country, announced a waiver to late repayment fees which they said is part of the measures to support customers during this time of the COVID-19 outbreak.
Among them included Tala, Alternative Circle, Stawika Capital, Zenka Finance, MyCredit, Okolea, LPesa, Kopacent, Four Kings Investment T/A Sotiwa, Mobile Financial Solutions (MFS), Kuwazo Capital, and Finance Plan Ltd. Other members include Branch, Vaell, Roamtech solutions, Aspira and MicroMobile.
As of September 2018, there were 110 mobile loan apps on the two main app stores from 74 unique developers. 65 of these were pulled down as of April 2019, while 47 new ones were developed by 43 unique developers.
This brought down the number to 92 as of April 2019 in the app stores, but the number could be higher owing to new developments.
Borrowers who log on to the apps now are told that “they cannot get loans now” or “try on a later date”, without announcing suspension of operations.