Are mobile loan apps a liability or necessity?

Are mobile loan apps a liability or necessity?

Mobile loan apps in Kenya have opened up a pandora’s box even as digital lenders continue to entice users with easy access.

Linda Bonyo, founder of Lawyers Hub Kenya, says mobile loan apps should prioritise protection of consumers data when the apps are created.

Also Read: The digital lending craze, many Kenyans hooked

“Some terms and conditions on the mobile loan apps are long and people just click ‘I agree’ because they want to borrow money quickly,” she said.

She was speaking during the Day Break show on Citizen TV on Thursday.

A report in the local dailies said over 500,000 Kenyans are on the CRB blacklist, an increase 150,000 three years ago.

On May 23 this year, Belgut MP Nelson Koech proposed scrapping of the Credit Reference Bureau (CRB) listing law.

According to him, it stifles growth among the youth particularly when companies use the listing as part of the employment process.

He insisted that CRB should not be giving personal information such as debt status to third parties.

According to Sam Omukoko, CEO of Metropol Credit Reference Bureau, government employers ask for CRB clearance certificate in accordance to Chapter 6 of the Constitution.

He said mobile loans have enabled Kenyans to have easy access to loans and lenders give money on the understanding that they will be paid back.

“If one takes a loan and the terms are that you pay within a week and you do not, then you have defaulted. The next step is recovery by the lender,” Omukoko said during the Day Break show.

He continued: “When you are blacklisted it means you defaulted. The record stays on your profile for 5 years but it does not mean that if you pay you will be denied credit moving forward.”

Also Read: Loan apps leave more-debt ridden Kenyans

The Metropol boss however raised concern on data protection laws noting that they have had cases of identity theft where people steal personal details and use them to get credit.

He proposed the use of bio-metrics as a security step in accessing mobile loan facilities.

The Kenyan Government is yet to set up proper mechanisms for data protection: the Data Protection Bill is still stuck in Parliament.

Also Read: OPINION – The debt trap: How to escape the vicious cycle of mobile loan apps

“In Kenya, we are not yet at the right place in protecting our data,” Ms. Bonyo said, adding that there needs to be a separation or personas so that one’s online persona is not an equivalent of their legal persona.

Ivan Mbowa, a member of the Digital Lenders Board, said digital lenders have to hold themselves in high standards.

“We welcome the opportunity to work with the regulator, CBK, on addressing identity theft,” he said.

Kevin Mwangi, an investment analyst at Amana Capital, averred that having debt is not bad but it needs to be used for the right purposes.

“The challenge is that some young people borrow to fund a lifestyle they cannot afford.

“We need to teach people that loans are to be used to better lives by doing business or investing where you will get returns,” he said during the show.

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