Kenya: A Financial Consumer Protection & Debt Policy Review
Consumer lending, as well as digital lending have exploded in Kenya in recent years. And, a high percentage of those loans are in arrears or default, resulting in significantly negative consequences for financial consumers; including a negative listing on the credit bureau, harassment by debt collectors and in some cases, incarceration. In Kenya, live legislation allows for creditors to pursue the incarceration of debtors who default on commercial loans. Serving time in prison does not absolve the underlying debt, nor is debt relief available through bankruptcy or insolvency proceedings to low income "natural persons." The law is complex and requires a specialized insolvency law practitioner and funds to pay court filing fees. Thus, a poor person who becomes debt distressed due to the loss of income is likely to remain mired in debt for a long period of time. And, with no outside intervention, this could result in financial exclusion for generations of Kenyans.
This publication looks at the consumer landing landscape for the poor and makes financial inclusion, financial consumer protection, and financial literacy-related suggestions to the Kenyan Government.