Kenya has been leading 20 other African countries as the giant in financial inclusion for the last 10 years. The milestones in financial inclusion have been attributed to digital finance providers who have been responsible for lending to individuals and micro-businesses.
Financial inclusivity is essential as an open market can lead to some members of the society being excluded due to non-standardized practices. Digital financial providers understand that regulation is the way to get a win-win outcome.
Digital finance providers not only provide emergency cash to Kenyans but also financial education, a case of not just giving the customer fish but showing them how to fish too. Thanks to the evolution in technology, Kenya’s financial sector has taken a shift.
Read More: Parliament Invites The Public To Give Views On Regulation Of Digital Lenders
There is a Bill in the National Assembly that seeks to regulate digital lenders in Kenya. Already, the National Assembly has invited Kenyans to present their views concerning the Bill that has already undergone the First Reading.
“This legislation arises from the need to ensure fair and non-discriminatory marketplace for access to credit through a legal framework to regulate digital borrowing platforms,” said the National Assembly in a notice to the public.
The Digital Lenders Association of Kenya (DLAK) has said that its members are not against the regulation of the sector. The Association said that it has never been against being regulated because it is only through rules and laws that order is achieved.
“We welcome regulation because it is a sign that the market is maturing. We are not against the regulations as some people might think,” said Mr. Kevin Mutiso from the Digital Lenders Association of Kenya.
According to the Digital Lenders Association, hasty over-regulation of digital lenders will choke off financial access for those individuals and small business owners needing it most.
“Regulation and no restriction is the best way to manage the digital financial providers’ space to ensure that small businesses don’t lose this critical cash source,” said the Association in a statement.
The Association believes that regulation should be approached with the customer in mind. Over 7 million Kenyans use digital financial providers and any guidelines put in place should be for the benefit of this silent majority.
There is a need for a reasonable and balanced regulation that will foster sustainable digital finance innovation for Kenyans. Digital financial access regulation should be approached with the future in mind.
The future of the industry, the future of the economy, and the future of the customers. It should be bigger than the here and now.
“We have seen lives changed for the better through access to digital financial products. When regulated fairly, this could be a continued option for the new-age entrepreneurs who have grown up with access to digital solutions,” said Digital Lenders Association.
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