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Branch, Tala among five lending apps operating illegally in kenya. Kenyans asked not to repay existing loans

Kenya’s government has threatened to revoke licences for Branch,Tala,Opesa,Okash and Zenka mobile loans apps as they operate illegally in the country. “We are urging the public not to clear the existing loans until a case is determined on how the Mobile lending apps acquired licences to operate. We are doing everything humanly possible to ensure that all business operations in the country follow the law” Dr. Matiang’i said.

Government’s statement came after a section of Kenyans raised complaints that the introduction of the mobile loan lending apps is a scheme to extort the poor. Majority of the unemployed population condemned Okash and Opesa management for charging exorbitant interests with an aim of siphoning from the masses. “I owed Okash and Opesa less than five thousands shillings a month ago,right now they are demanding close to nine thousands from me. I think the management of these two should be stopped by relevant authorities” Linus Maina told the press.

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Five financial sector regulators have warned Kenyans against an increasing number of “unlicensed and unregulated” financial services and products, saying they pose huge risks.

The agencies, including the Central Bank of Kenya (CBK), the Sacco Societies Regulatory Authority, the Insurance Regulatory Authority, the Capital Markets Authority and the Ministry of Trade, said the services include pyramid schemes, credit and savings schemes and “fraudulent” mobile applications that are available on platforms such as the Google Play Store and Apple Store.

“Some of these products require payment of a registration fee,” they said in a joint statement. Some require members of the public to save before qualifying for a credit facility.”
They also singled out get-rich-quick scams that guarantee high returns in a short period.

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“They promise unusually high returns with little or no risk or without disclosing the related risks.

“They may require recruitment of more clients to earn points and qualify for more benefits such as bigger loans,” they said.

More than one in four Kenyans —or more than six million people — have taken a digital loan, highlighting the pivotal role mobile lending plays.

A recent report by the Financial Sector Deepening Kenya, the CBK and the Kenya National Bureau of Statistics shows Kenyans turn to the digital micro-loans mainly for short-term working capital due to convenience.

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“The findings suggest that digital credit has become a leading source of credit in Kenya and that it is mostly used to finance working capital and day-to-day consumption needs,” said the survey.
In May, the Treasury published a draft Bill on financial regulation, which for the first time covers digital lenders.

Its key aim is to ensure that providers treat retail customers fairly, it said. “We have a lot of predatory lending out here, which we want to regulate,” Geoffrey Mwau, director general of budget, fiscal and economic affairs at the Treasury said on May 25.

Government to launch its own lending app

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