Unlicensed loan apps in Kenya face Google ban

Google has implemented a new policy that requires digital lenders operating in Kenya to provide proof of a license to operate in the country. This policy aims to address the issue of rogue loan apps that are prevalent in Kenya. The policy will ensure that only providers with licenses from the Central Bank of Kenya (CBK) will be listed on Google’s Play Store.

Digital lenders whose applications have not yet been approved by CBK will be granted interim approval from Google for 45 days, provided they can demonstrate that their license application is pending. If the application for a license is rejected within the 45-day period, the interim approval will be immediately rescinded.

Google’s decision to regulate loan apps in Kenya follows similar measures in India, Indonesia, and the Philippines, where loan providers are required to have necessary permits from financial services regulators to be listed on Play Store. In Nigeria, loan apps are required to have a verifiable approval letter from the Federal Competition and Consumer Protection Commission.

As of the time of filing this report, only 22 out of 381 digital lenders that applied have been licensed by CBK, including Tala, Pezesha, and Jumo. Kenya and Nigeria are prominent tech centers in Africa and have seen an increase in loan apps offering quick unsecured personal or business loans. However, the lack of regulations and Google Play Store’s lax vetting process have led to the growth of rogue operators, prompting authorities to take action to protect citizens.

In Kenya, digital lenders are also subject to a new regulatory environment that prohibits the use of debt-shaming tactics, such as posting personal information online, unauthorized calls and messages to customers, and accessing their contact lists for coercion in case of default. Loan apps are required to reveal their pricing model, disclose all terms and charges to customers, and notify the regulator before introducing new products or making changes to existing ones. They must also disclose their source of funds and provide evidence as confirmation of compliance with anti-money laundering regulations.