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{
    "id": 1097477,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1097477/?format=api",
    "text_counter": 311,
    "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": "cent 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”, and “digital credit provider” are defined to make it easier for regulation, so that Central Bank regulates. They know exactly what they are regulating. Clause 3 provides full powers to CBK to license 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 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: 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."
}