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"type": "speech",
"speaker_name": "Kitui Rural, CCU",
"speaker_title": "Hon. David Mboni",
"speaker": {
"id": 13388,
"legal_name": "David Mwalika Mboni",
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"content": " Thank you, Hon. Temporary Deputy Speaker, for giving me this opportunity to also support the Bill. Digital lending in this country started in 2013 and there are over 20 digital lenders in the country with a total operation fund of Kshs4 billion, which is actually equivalent to a third tier bank. However, there is currently no legal framework in governing digital lending although there are many advantages of digital lending like easy access to credit by borrowers. A digital lender just needs a hub which anybody can apply. So, basically, the borrower does not need collateral to apply for loans. It also facilitates small and micro businesses like mama mboga . They can get money from the digital lenders and do business. However, there are several disadvantages of digital lending like high interest charges and lack of information disclosure. If you apply for money from digital lenders, they do not disclose how much they are charging you and you end up paying higher interest rates. There is also harassment of customers and their relatives when you borrow and when you default. I am very sure most of us here got a call from digital lenders telling you that your relative has actually borrowed and has defaulted on the loan. These are some of the disadvantages. Since there are many borrowers and there is no information sharing, people who tend to borrow from many lenders become highly indebted. So, the proposals include regulating the regional lenders by licensing them, so that this country can know the number of lenders and determine capital adequacy and minimum liquidity required by digital lenders. This will ensure that we do not have jokers in the market. As I have said, someone needs an App and a few million shillings and they start lending. These regulations will, therefore, ensure that the CBK comes up with a requirement of how much somebody should have before they start giving loans. The CBK will also supervise the digital lenders and suspend and revoke licenses if the lenders misbehave. All these regulations are aimed at information sharing, so that the lenders can disclose all the information, not only to customers, but to everybody including other lenders. This will significantly reduce the number of people who borrow from one App to the other. The regulations are also aimed at protecting the customer from being overcharged or exploited by the lenders. As I said, the charges are a bit high. For example, if you are charged about 30 per cent per month, in a year, that is 360 per cent. This is quite high."
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