Treasury Moves To Shield Kenyans From Predatory Digital Loans

By Alain Mugisho Nabalinda

In a decisive move aimed at protecting consumers, the National Treasury has unveiled new measures to shield Kenyans from predatory digital lending practices. The reforms come amid growing concerns over high interest rates, hidden charges, and aggressive debt collection tactics by some digital loan providers operating across the country.

Over the past decade, digital lending apps have rapidly expanded in Kenya, fueled by mobile money platforms and increased smartphone penetration. For many citizens, especially young people and small business owners, these platforms offered quick access to credit without the paperwork required by traditional banks. However, the convenience came at a cost. Some lenders imposed extremely high interest rates, short repayment periods, and penalties that trapped borrowers in cycles of debt.

Under the new proposals, the Treasury plans to strengthen licensing requirements, enforce interest rate transparency, and enhance data protection standards. Digital lenders will be required to clearly disclose loan terms, including total repayment amounts and penalties. The reforms also seek to curb harassment and public shaming tactics used by some debt collectors, practices that have sparked widespread public complaints.

The move builds on regulatory efforts already initiated by the Central Bank of Kenya, which has been tightening oversight of digital credit providers. By introducing stricter compliance standards, authorities hope to create a healthier lending environment that balances financial inclusion with consumer protection.

From an economic perspective, the reforms are expected to restore trust in the digital credit market. Kenya’s fintech sector has been praised globally for innovation, but unchecked lending practices threatened to undermine its reputation. Responsible regulation could encourage sustainable growth while protecting vulnerable borrowers.

For many Kenyans, access to credit remains essential for business expansion, emergency expenses, and household needs. By stepping in to address predatory practices, the Treasury is signaling a commitment to fairness and financial stability. If effectively implemented, the new measures could mark a turning point in ensuring that digital loans empower citizens rather than exploit them.

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