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{
"id": 1095443,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1095443/?format=api",
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"type": "speech",
"speaker_name": "Homa Bay CWR, ODM",
"speaker_title": "Hon. (Ms.) Gladys Wanga",
"speaker": {
"id": 590,
"legal_name": "Gladys Atieno Nyasuna",
"slug": "gladys-atieno-nyasuna"
},
"content": "from a newer one to pay the older one. Therefore, there is a crisis of over indebtedness that has emerged, especially among our younger population. It is because of the availability of this credit. Over and above that, there also has been public concern around the issue of the pricing of these products. The issue of pricing is also a key issue. As we were conducting public participation, it emerged that some of these lenders charge interests as high as 150 per cent. Therefore, when people are not able to cope with the interest rate, you just take your line, throw it away, buy a new line and begin to use that line. If you look at the interest rate that is charged on Fuliza and Fuliza is one of the regulated ones, it is high. I do not know whether you have Fuliza on your phones. I have Fuliza on my phone. Every time I want to send money to a funeral or another pressing matter and I do not have money on my M-Pesa, I just go to Fuliza and I send it. But if you look at the interest rates that are charged on that product, they are nowhere near the regular rates. There is even concern around, not just about the unregulated sector of digital lending but also the even the regulated sector lenders, that when they use the digital platform, the interest rates become much higher than when they are lending directly over the counter. Those are some of the concerns. Then there is a big concern around the issue of data protection. Data protection is a major issue. Kenyans have the right to privacy of their data. But if you borrow from a digital lender, they mine the data. Once they mine the data, they can even access all numbers on your phonebook. Hon. Sankok here might be surprised. Because he has my number, they might send him a message that Hon. Gladys Wanga borrowed Kshs1,000 and three months have elapsed since she borrowed it. She has not paid it. Without my consent, that information will have gone to my brother, sister, boss and friends hence causing unnecessary embarrassment to the clients. Because of this data issue when Covid-19 struck, the Central Bank of Kenya disallowed digital lenders from listing the creditors at the Credit Reference Bureau (CRB). This listing was being abused. People were taking loans. You may have borrowed Kshs2,000 or Kshs3,000 shillings and you have not paid with interest that is at 100% or whatever very high percentage. It may have increased and it is now Kshs10,000. When you are unable to pay it, you are listed at the CRB. When you are looking for a job as a young graduate with a degree or a diploma, you are told that one of the qualifications is to go and get clearance from the CRB. With a loan of Ksh2,000, you have already been listed and you are unable to get clearance from CRB. There is a very thin line there because digital lenders lend people they do not know. The only fall back is your listing. Without listing, a lot of digital lending businesses cannot survive because they have no other way of catching up with defaulters. Once they are regulated and the number of things within the sector is regulated, then the issue of listing can be allowed for those who are regulated. Clause 2 of the Bill provides for definition of terms, such as digital channel, which is the channel that is used or the product that is used for purposes of that sale. Terms such as digital credit, business specified; digital credit provider are defined to make it easier for regulation, so that as Central Bank regulates. They know exactly what they are regulating. Clause 3 provides full powers to CBK to licence and supervise digital credit providers that are not regulated under any other written law. So just to be clear, this Bill does not regulate everybody. As I had mentioned earlier, there are digital lenders that are already regulated. For example, banks that use digital platforms to lend are already regulated under the CBK Act. Therefore, they do not fall under the ambit of this law. This law is for those that are not regulated under any other written law. I will discuss Clause 3 in detail when I speak to some of the feedback we received from the public with regard to the extent to which CBK should regulate. There was a concern emerging of whether we should regulate innovation to its death. So, the Committee was working within the line of making The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}