Recent reports have placed between six million and nine million Kenyans as consumers of the wide array of digital lending services that seem to have found product market fit. The ebb and flow of demand side consumption, is such that no one takes out a facility with a primary agenda of defaulting or absconding.
Research points to poor business performance, loss of income, poor planning and prioritisation of expenditure as main reasons for falling into delinquent status. What follows is the listing of that status with immediate repercussions on the ability to access additional credit to stabilise and play the hand dealt. To many what still looks like a dark art, is how to fix and improve on one’s credit score.
First, you need to find out where you stand in the system. Identity fraud is rampant and our small pool of shared English and ethnic names does not help.
Also, banks are notorious for escalation of activity based anomalies such as your account going into over draft when they take out monthly fees for example.
Truth is millions of account operate in zero or near zero status and most are opened for specific purposes with funds in constant transit. It will take some effort and a little money but engage the major licensed credit bureaus and see what they have on you. Where discrepancies exist, follow up and ensure correctness of your data.
Second is that you need to be visible on the system. I used to think that having no financial debt registered should be the aim of every adult human, until I needed a facility and was told that there was nothing to work with.
Agreed, digital lenders came to the market with differentiated models to score users, but their caps limit how far you could leverage. The thought here is to build the ‘relationship’ before you need it. Think of how some African mothers interact with local kiosk owners; even when they can pay cash they will ask for credit and since it often comes at no interest, pay it back soon. Spread across multiple kiosks when hard times come, they have access to multiple lines of credit with no questions asked.
Third is discipline. Some lenders have gone rogue and misuse borrower data where they send unsolicited messages to one’s contacts. All however default to collection agencies whose tactics leave a lot to be desired. If you have or know someone who has been on the receiving end, the one wish is to get it done and dusted. Frugality, resourcefulness and determination are the only way out.
Credit scores are but a snapshot and you have the power to decide what it reads next time it is pulled up.
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.