With the World Consumer Rights Day (WCRD) marked on March 15, it is important to take stock of progress made in consumer markets so far.
Over the past decade, consumer markets for goods and services have undergone profound transformation. Global markets and the use of new technologies are driving the changes in services. These changes without a doubt have brought significant benefits to clients and in many instances lead to improved efficiency.
The theme for this year’s WCRD focuses on better and trusted digital products. An increasing number of consumers have access to the Internet than before, which provides easier and faster access to products and services. Globally, smart products’ ownership is estimated at 23.1 billion, which is approximately one person for three devices.
According to the Communication Authority of Kenya (CA) first quarter sector statistics report for 2018/2019, the total number of active Internet/data subscriptions is estimated at 42.2 million, which essentially implies over 90 percent Internet subscription. However, high subscription might be as a result of most users owing more than one device.
The advent of smart technology brings many opportunities for consumers such as: access to new services, more responsive products, greater convenience and choice. However, relatively less attention is being paid to the challenges these developments might pose for consumers. For instance, there are potential risks such as lack of security, privacy, and often lack of clarity. As product and devices carry out different functions and link to more systems, they will become more complicated and it may become difficult for consumers to have full clarity on how they work.
Again, it is difficult to ascertain whether the product, device or service delivered through digital channels are actually functioning as promised. The consumer may not have adequate opportunity to examine the goods, query about the condition, or try out the goods to decide whether they are acceptable.
This is a classic case of information asymmetry which is often the case when dealing with complex, technical products, where the producers possess more information about the product than the consumer. The tools applied to overcome information asymmetry in other markets such as financial or motor markets is through the use of quality marks, trusted intermediaries, and regulation. However, these tools might be limited in the digital markets given the interoperability with others.
Ideally, an effective consumer protection framework should address these inherent information asymmetry and power imbalances in markets.
This includes the introduction of greater transparency and awareness about the goods and services, promotion of competition in the marketplace, prevention of fraud, consumer education, and elimination of unfair practices.
It is imperative for institutions such the Competition Authority of Kenya (CAK) and the Kenya Consumer Protection Advisory Committee (KECOPAC) with the mandate of consumer protection to adopt a pro-active approach to ensure digital markets work for consumers. Such a pro-active approach could contribute considerably to rebuild consumer trust.
Also, these institutions need to create consumer awareness about the potential risks when dealing with this products and how consumers can protect themselves. Education can be an effective form of consumer protection although it is not a substitute for regulation but complements an effective legal and regulatory framework.
Martin Mulwa, Programme Assistant, Consumer Unity and Trust Society (CUTS), Nairobi. [email protected]
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.