Central Bank
CGAP
CGAP’s Policy Team
Consultative Group
Kenya
Sacco Societies Regulatory Authority

For Kenyans, having more than 1 mobile line makes sense

Lack of adequate details on pricing has forced Kenyans to buy several mobile telephone lines for various purposes, says reportKenya has witnessed a boom in digital money providers from banks to start-alone fintech based lenders that fall under no regulatory regime. The new tech lenders operate obscurely, under no laws and are yet to publicly declare charges levied for their easy-to-get small advances.

For Kenyans, having more than 1 mobile line makes sense

It has until now been unclear how Safaricom, Airtel and Telkom Kenya were going to settle debts incurred as money moves from one network to another. FILE PHOTO | JOSEPH KANYI | NMG

A pro-poor lobby is calling for disclosure of all charges made on mobile loans even as it says Kenya’s digital money regime is increasing inclusivity. The 30-member group says this is the reason why many subscribers own two lines; one for sending money and the other for making calls and texts.It says the country could do better by introducing regulations that compel digital money service providers to make full disclosures.“Transparency rules should be considered as part of a broader package of consumer protection and competition reforms to support choice, innovation and consumer welfare in digital financial services,” said the Consultative Group to Assist the Poor (CGAP).

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In its year-long survey between November 2016 and November 2017 that involved 825 interviewees living in Kisumu, Eldoret, Kitale, Mombasa and Nairobi, CGAP found that lack of adequate details on pricing had forced Kenyans to buy several mobile telephone lines for various purposes.“Forty five per cent own two lines; 30 per cent maintain one line oblivious of the high costs for certain services while 25 per cent have three or more lines,” it said.CGAP’s survey led by Mr Rafe Mazer of CGAP’s Policy Team on applying behavioural research to consumer protection and financial inclusion, called for urgent measures to address the missing information link to facilitate informed judgement by Kenyans saying it hindered choice and switching. To generate an all-inclusive regulatory regime, CGAP said Kenya needs to consider creating a single oversight body for the financial technology (Fintech) firms running lending businesses in the country.“Financial sector regulators could consider enforcing rules indirectly via regulated e-money and other payments channel providers unregulated actors such as digital lenders rely upon for loan disbursement and collection. Similarly, actions should be coordinated across banking, insurance, securities and other financial sector regulators,” it said.Kenya has witnessed a boom in digital money providers from banks to start-alone fintech based lenders that fall under no regulatory regime giving them a leeway to charge hefty fees, much to the dislike of banks that have also joined the mobile money craze.While banks and saccos report to Central Bank of Kenya and Sacco Societies Regulatory Authority, the new tech lenders operate obscurely, under no laws and are yet to publicly declare charges levied for their easy-to-get small advances.The report dubbed Does Transparency Matter-Assessing the impact of improved disclosure in digital financial services in Kenya found that 46.7 per cent of the interviewees had Airtel lines due its low calling cost, 31.8 per cent and 61.7 per cent had Safaricom and Equitel respectively mainly for financial services but Safaricom remains king with 86 per cent of respondents being its patrons.Interestingly, greater gains were made on use of digital money to settle purchase of goods and services rendered notably Kenya Power (32 per cent), betting (21 per cent), decoder subscriptions (11 per cent) and merchants (11 per cent).

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