Analogia Malenga
JF-Expert Member
- Feb 24, 2012
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App ya kuomba mkopo, Silicon Savannah imetajwa kutumia vibaya taarifa za wateja hali inayofanya uhitaji wa sheria ya Udhibiti wa Taarifa
Mteja wa Mkopo anaposhindwa marejesho, app hiyo huvuna mawasiliano 50 ya mteja huyo na huwatumia sms na kupiga simu ili kumtangaza kuwa hajalipa deni
Mbali na hali hii kuwa aibu kwa mteja pia ni usumbufu kwa watu wengine ambao watapigiwa simu mara 20 kwa siku kuambiwa kuwa fulani hajalipa deni.
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Digital lenders have boosted access to credit in Kenya but some are using 'predatory' practices to profit from the poor, consumers and authorities say
* Digital lending apps mushroom in the East African nation
* Scant regulation seen permitting data abuse, debt shaming
* Government moves to regulate loan apps to curb data violations
By Nita Bhalla and Dominic Kirui
NAIROBI, Jan 19 (Thomson Reuters Foundation) - The 14 days given to John Bigingi to repay a loan of 8,200 Kenyan Shillings ($72) had barely lapsed when he started receiving text messages threatening to call the contacts on his phone and expose him as a defaulter.
"Silence means you don't want to pay your loan which is already due," said an SMS message sent by digital lender iPesa to Bigingi and shown to the Thomson Reuters Foundation.
"Take it serious. Your 50 contacts and emergency contacts will start receiving 20 calls and 15 messages (at) exactly 6 p.m. Pay now to avoid embarrassment!!!" read the message, which was written in capital letters.
The 42-year-old Kenyan taxi driver was horrified.
"I didn't understand how they got my contacts but soon after they called my closest relatives, including my brother and my wife, who didn't know about the loan," he said.
Ipesa did not respond to requests for comment.
Experiences like Bigingi's are increasingly common as more cash-strapped Kenyans borrow from scores of unregulated mobile-based loan apps, though a group representing the sector said such practices were limited to a few "rogue" lenders.
Offering quick, collateral-free credit to the largely unbanked, digital lenders have provided millions of Kenyans with access to finance to pay for everything from medical bills and school fees to capital for their businesses.
Economists have hailed them for boosting financial inclusion in a nation where only about 40% of people have a bank account, but many are also accused by customers and digital rights groups of using unethical practices to profit from the poor.
Some borrowers say the loan apps are infringing on their data privacy by bombarding the contacts saved on their phones with calls and message when they default.
Digital rights groups also accuse them of illegally sharing clients' personal information with third parties and charging exorbitant interest rates that push poor families deeper into debt.
Seeking to crack down on predatory lenders, Kenya approved legislation regulating the sector in December.
Kenya's Data Commissioner Immaculate Kassait, who has been investigating complaints about lenders, said the legislation would curtail the abuse of private data by loan apps and boost compliance with the country's two-year-old data protection law.
"The (new law) makes it an additional requirement for digital lenders to comply with the Data Protection Act, should they wish to retain their licenses," said Kassait, whose office is responsible for enforcing the 2019 law.
'SILICON SAVANNAH'
Dubbed "Silicon Savannah", Kenya has emerged as a major player in the fintech space since telecoms operator Safaricom pioneered its M-Pesa mobile money service in 2007 for people without access to the formal banking network.
From a basic SIM card-based money transfer application, M-Pesa has evolved into a fully fledged financial service, offering loans and savings in conjunction with local banks.
In a country of 47 million people, there are more than 34.5 million active subscribers to mobile money transfer services, Communication Authority of Kenya data shows.
With mobile penetration surging, a plethora of fintech start-ups have emerged, eager to tap into the high demand for loans from low-income Kenyans who struggle to access credit due to a lack of employment, collateral or guarantors.
More than 120 digital lenders operate in Kenya - some backed by Silicon Valley and Chinese investors - and are found on various platforms, including the App and Google Play stores.
Using machine learning algorithms, the apps assess the creditworthiness of borrowers by scanning personal data on their phones including contacts, mobile money transactions, their social media footprint and web history.
Within minutes, loans - ranging from 500 shillings to 50,000 shillings - are deposited and accessible on borrowers' phones.
Demand for such loans has surged: two million Kenyans used loan apps in 2019, up from 200,000 in 2016, central bank data shows.
DATA ABUSE, DEBT SHAMING
But the sector has been largely unregulated, allowing some digital lenders to engage in heavy-handed tactics. "They called my boss and informed him that I had taken a loan and ....
news.trust.org
Mteja wa Mkopo anaposhindwa marejesho, app hiyo huvuna mawasiliano 50 ya mteja huyo na huwatumia sms na kupiga simu ili kumtangaza kuwa hajalipa deni
Mbali na hali hii kuwa aibu kwa mteja pia ni usumbufu kwa watu wengine ambao watapigiwa simu mara 20 kwa siku kuambiwa kuwa fulani hajalipa deni.
====
Digital lenders have boosted access to credit in Kenya but some are using 'predatory' practices to profit from the poor, consumers and authorities say
* Digital lending apps mushroom in the East African nation
* Scant regulation seen permitting data abuse, debt shaming
* Government moves to regulate loan apps to curb data violations
By Nita Bhalla and Dominic Kirui
NAIROBI, Jan 19 (Thomson Reuters Foundation) - The 14 days given to John Bigingi to repay a loan of 8,200 Kenyan Shillings ($72) had barely lapsed when he started receiving text messages threatening to call the contacts on his phone and expose him as a defaulter.
"Silence means you don't want to pay your loan which is already due," said an SMS message sent by digital lender iPesa to Bigingi and shown to the Thomson Reuters Foundation.
"Take it serious. Your 50 contacts and emergency contacts will start receiving 20 calls and 15 messages (at) exactly 6 p.m. Pay now to avoid embarrassment!!!" read the message, which was written in capital letters.
The 42-year-old Kenyan taxi driver was horrified.
"I didn't understand how they got my contacts but soon after they called my closest relatives, including my brother and my wife, who didn't know about the loan," he said.
Ipesa did not respond to requests for comment.
Experiences like Bigingi's are increasingly common as more cash-strapped Kenyans borrow from scores of unregulated mobile-based loan apps, though a group representing the sector said such practices were limited to a few "rogue" lenders.
Offering quick, collateral-free credit to the largely unbanked, digital lenders have provided millions of Kenyans with access to finance to pay for everything from medical bills and school fees to capital for their businesses.
Economists have hailed them for boosting financial inclusion in a nation where only about 40% of people have a bank account, but many are also accused by customers and digital rights groups of using unethical practices to profit from the poor.
Some borrowers say the loan apps are infringing on their data privacy by bombarding the contacts saved on their phones with calls and message when they default.
Digital rights groups also accuse them of illegally sharing clients' personal information with third parties and charging exorbitant interest rates that push poor families deeper into debt.
Seeking to crack down on predatory lenders, Kenya approved legislation regulating the sector in December.
Kenya's Data Commissioner Immaculate Kassait, who has been investigating complaints about lenders, said the legislation would curtail the abuse of private data by loan apps and boost compliance with the country's two-year-old data protection law.
"The (new law) makes it an additional requirement for digital lenders to comply with the Data Protection Act, should they wish to retain their licenses," said Kassait, whose office is responsible for enforcing the 2019 law.
'SILICON SAVANNAH'
Dubbed "Silicon Savannah", Kenya has emerged as a major player in the fintech space since telecoms operator Safaricom pioneered its M-Pesa mobile money service in 2007 for people without access to the formal banking network.
From a basic SIM card-based money transfer application, M-Pesa has evolved into a fully fledged financial service, offering loans and savings in conjunction with local banks.
In a country of 47 million people, there are more than 34.5 million active subscribers to mobile money transfer services, Communication Authority of Kenya data shows.
With mobile penetration surging, a plethora of fintech start-ups have emerged, eager to tap into the high demand for loans from low-income Kenyans who struggle to access credit due to a lack of employment, collateral or guarantors.
More than 120 digital lenders operate in Kenya - some backed by Silicon Valley and Chinese investors - and are found on various platforms, including the App and Google Play stores.
Using machine learning algorithms, the apps assess the creditworthiness of borrowers by scanning personal data on their phones including contacts, mobile money transactions, their social media footprint and web history.
Within minutes, loans - ranging from 500 shillings to 50,000 shillings - are deposited and accessible on borrowers' phones.
Demand for such loans has surged: two million Kenyans used loan apps in 2019, up from 200,000 in 2016, central bank data shows.
DATA ABUSE, DEBT SHAMING
But the sector has been largely unregulated, allowing some digital lenders to engage in heavy-handed tactics. "They called my boss and informed him that I had taken a loan and ....
Kenya cracks down on loan apps abusing customer data | Context
Digital lenders have boosted access to credit in Kenya but some like iPesa and Opesa have been accused of using 'predatory' practices to profit from the poor
news.trust.org