"Mobile lenders to disclose charges before loan offers"

Mobile digital lenders will be required to disclose the total charges including interest rates, late payment and rollover fees for their loans before disbursing credit to customers. The Competition Authority of Kenya (CAK) said they would apply the same model used on mobile money transfer operators where cost is displayed before sending cash to increase transparency in the digital sector.

CAK director-general Kariuki Wang’ombe said a study by the watchdog disclosed most Kenyans are not aware of their rights and do not read the documents when they are signing up for a loan. The study revealed that only 27 percent of digital borrowers were aware of the fees and costs of other digital loan providers in the market. The ease of disbursement of mobile loans by digital lenders is attracting many Kenyans but the high costs have ended up saddling borrowers with costly interest rates, which rise up to 520 percent when annualised, leading to mounting defaults.