The Regulation of digital credit in Kenya - The Case for consumer protection

Abstract

This dissertation seeks to makes a case for consumer protection for digital credit. Digital credit is a form of lending of short term loans while leveraging digital infrastructure. Digital credit is automatic and easily accessible even to those unserved and underserved by the formal financial institutions. Digital credit is therefore a technological tool of financial inclusion. However, if digital credit is not properly regulated, there are chances of the consumers being exploited. This is because of the vulnerable nature of the consumers who are unbanked, poor and financially illiterate. There are various consumer risks that arise as a result of digital credit. The risk of over-indebtedness is the focus risk of the dissertation. The dissertation also makes a comparison with India’s regulatory framework given the rampant use of digital credit in the country and the economic similarity of Kenya and India. The dissertation finally gives a regulatory framework that can be adopted in Kenya to protect these consumers.