State regulation of mobile digital lenders in Kenya has been long in coming, but it is now here.

The Central Bank of Kenya (CBK) now has the powers to control lending rates of digital mobile lenders after President Uhuru Kenyatta signed a law that gives the regulator the ability control mobile loans products, management, and sharing of borrower information.

The Central Bank of Kenya (Amendment) Bill, 2021 that came into effect yesterday equips the regulator with the teeth to oversee digital lenders and put “predatory” behaviour of some mobile lenders in check.

The new law requires mobile loan providers to register with the CBK within six months from yesterday when the President assented to it.

Many unregulated microlenders have set shop in Kenya, looking to tap the seemingly limitless appetite for quick loans by customers who previously had little or no access to credit.

The fast growth in the market is driven by the convenience of obtaining the loans which is just a matter of pressing a button on the mobile phone, and at the comfort of your bed or living room.

The accessibility of the loans and multiplicity of players means one can hope from one digital lender to another in the process amassing debts they have no capacity to repay. This is the main reason that has always been cited for the high number of defaulters who have been listed on the credit reference bureaus (CRBs).

Last week, Central Bank Governor Patrick Njoroge ruled out placing a limit on the interest rates for digital lenders, noting that the loan pricing models used by the mainstream banks will be used.