Rogue digital lenders abuse data privacy and debt-shame borrowers in East African state
19 January 2022 - 22:52Nairobi — The 14 days given to John Bigingi to repay a loan of 8,200 Kenyan Shillings had barely lapsed when he started receiving text messages threatening to call the contacts on his phone and expose him as a defaulter.
Your data is taken, it is used to profile you and attain data on your contacts and then sold on. In return, what you get is an expensive loan which you can’t pay backEconomists have hailed them for boosting financial inclusion in a nation where only about 40% of people have a bank account, but many are also accused by customers and digital rights groups of using unethical practices to profit from the poor.
Kenya's Data Commissioner Immaculate Kassait, who has been investigating complaints about lenders, said the legislation would curtail the abuse of private data by loan apps and boost compliance with the country’s two-year-old data protection law. With mobile penetration surging, a plethora of fintech start-ups have emerged, eager to tap into the high demand for loans from low-income Kenyans who struggle to access credit due to a lack of employment, collateral or guarantors.
Demand for such loans has surged: 2-million Kenyans used loan apps in 2019, up from 200,000 in 2016, central bank data shows.But the sector has been largely unregulated, allowing some digital lenders to engage in heavy-handed tactics. “They called my boss and informed him that I had taken a loan and he should remind me to pay up,” said 26-year-old accountant Susan Njeri, who took a two-week loan of 2,300 shillings from an app called Opesa.Opesa said did not respond to a request for a comment.
Digital rights groups said many Kenyans were unaware of their privacy rights and did not know the loan apps were illegally mining and commodifying their personal information. Under the legislation approved last month, the central bank will regulate digital lenders and take action against those using illegal tactics.
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