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{
    "id": 1095444,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1095444/?format=api",
    "text_counter": 303,
    "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": "sure we regulate the sector, but at the same time we do not kill innovation. We should not strangle sectors that are new through regulation. If you make the process too tedious and too tight, you can strangle innovation and kill a sector that is growing. Clause 4 provides for powers of the Central Bank to make regulations among other issues such as licensing of digital credit providers. Clause 7 of the Bill provides for transition. It is important for the digital lenders to know how much time they have between the time of passing this law and the time of publishing of the regulations, how much time they have to comply and be licensed to move from the current regime to the next regime. Just some bit of data. According to a report of the financial sector, it is estimated that since the launch of M- Shwari, which is one of the digital lending products, the number of digital lenders and loans disbursed has grown substantially. According to this survey, it is estimated that digital borrowers reported taking an estimated 25 million digital loans or eight loans per borrower in 2018 on average. However, the distribution of digital loans used is concentrated among a minority of digital borrowers. It is interesting to note that digital borrowers are more heavily concentrated in urban areas. Sixty seven per cent live in urban settings and 44 per cent are formal borrowers and 34 per cent are informal borrowers. All of those live in urban areas. A majority of formal non-digital borrowers derive most of their income from farming or employment. Why are we moving to regulate? I have stated some of the reasons why we are moving to regulate. I just want to mention some of the issues that came up during the day of public participation that the Committee held. Some people will go to court and say the Committee or Parliament did not conduct public participation. The Committee received 11 memoranda from stakeholders. On 12th July and 13th of July 2021, the Committee met 10 stakeholders in Nairobi. The Committee met: i. The Office of the Data Protection Commissioner ii. The Communications Authority of Kenya iii. The Institute of Certified Public Accountants of Kenya iv. Digital lenders Association of Kenya v. The PAC Limited vi. Safaricom PLC vii. PriceWaterHouse Coopers Limited viii. The Lawyers Hub ix. ECM Consulting Group x. Angela and Company xi. Alternative Sacco Limited xii. Central Bank of Kenya Most of the stakeholders were in support of regulation generally. They said they do not mind being regulated. Even the digital lenders themselves said they do not mind being regulated. The area of contention was that there was a feeling among a majority of stakeholders that the prudential requirements for regulation among digital lenders was unnecessary. What they said was in regards to Clause 3 of the Bill. If you look at the powers given to Central Bank within the Bill, it has powers to license digital credit providers, determine the capital adequacy requirements, and determine minimum liquidity requirements for digital credit providers, approved digital channels and business models through which digital credit businesses are provided, among other things. The stakeholders were of the view that since digital lenders are not deposit taking, they do not take money from anybody. At no point does a digital lender owe anybody. The public owe the digital lenders at any given point. They were wondering why they would be given capital adequacy 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."
}