Kenya: Google sets rules to curb predatory digital lending

Author: Business Daily (Kenya), Published on: 26 September 2019

"Google seeks to set rules in digital lending ‘Wild West’"

Did you know that if you wanted to own a bank, you do not have to have Sh1 billion capital, apply for licences and pay taxes? All you do is just download an android package for free, customise it and voila you are a lender. The Android Package- APK is a file format used by the Android operating system for distribution and installation of mobile apps most of which are free. The ease of downloading, customising and operating the platform has seen known digital lenders increase to 62 in Kenya, where there are only 42 mainstream banks. 

However Google now wants to limit the number of platforms that enjoy this low barrier of entry into the banking realm, to ensure at least they are regulated in some form. To continue accessing the Google App store platform, the multinational has asked apps for personal loans to disclose maximum Annual Percentage Rate (APR), which generally includes interest rate plus fees and other costs for a year, or similar other rate calculated consistently as provided for by local regulatory framework. It has also banned those issuing loans that mature in less than two months. “We do not allow apps that promote personal loans which require repayment in full in 60 days or less from the date the loan is issued (we refer to these as "short-term personal loans"). This policy applies to apps which offer loans directly, lead generators, and those who connect consumers with third-party lenders,” the updated terms and policies read.

Eric Muriuki General Manager New Business Ventures at Commercial Bank of Africa (CBA) said the announcement is curious, wondering what motivated the tech giant to get involved in direct market intervention.

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Related companies: Google (part of Alphabet)