Mobile loan lenders and non-deposit micro-finance businesses are facing tough conditions in advancing loans to their clients as MPs plot to tighten regulations in the sector.
A draft legislative proposal by Kisumu West MP Rosa Buyu is seeking to introduce at least four conditions that the lenders will be required to meet before they are allowed to advance any loan.
It obligates lenders to give full and material disclosure of the charges and terms relating to the loans so that borrowers are fully aware of the consequences of the borrowing arrangements.
The proposal also seeks to subject the loan recovery process to the court procedures as envisaged in the civil procedure law.
A man holds his smartphone with the display of different types of mobile loan lending services displayed on his screen, in this illustration photo taken in Nairobi, December 8, 2021.
Photo credit: AFP
If the proposal is passed by the House, it will require lenders to give reasonable notice to borrowers before debt recovery
Subject to approval by Parliament, lenders will also be required to comply with statutory limits on the maximum amount recoverable on non-performing loans, capping total accumulated interest to protect defaulting borrowers from endless debt. Ms Buyu’s proposal seeks to boost consumer protection for those who borrow from non-deposit-taking micro-finance businesses, including mobile loan lenders.
“To protect the public from predatory behaviour of the non-deposit-taking micro-finance businesses, the legislative proposal obligates lenders to give full and material disclosure of the charges and terms relating to the loans so that borrowers are fully aware of the consequences of the borrowing arrangements,” reads the draft proposal.
The proposal comes at a time when the Public Petitions Committee is considering a petition by the boda boda riders’ association over unfair lending terms by Mogo Auto Limited, one of the asset-financing firms.
The petition was filed by the chairperson of the Kenya Bodaboda Riders and Owners Association, Mr Charles Gichira.
Digital Boda Drivers and Deliveries Association National Executive Chairman Calvince Okumu (centre) flanked by Kenya Boda-boda Association Nairobi Chair Alex Kulema (left) and Kenya Boda-boda Riders Association National Executive Chairman Charles Gichira address journalists at Green Park, Nairobi on June 24, 2026.
Photo credit: Lucy Wanjiru | Nation
The petition raises issues relating to high loan interest rates, hidden additional charges, inadequate disclosure of loan terms and conditions, difficulties in obtaining ownership documents even after loans have been repaid, improper debt recovery procedures, and breaches of privacy and data protection.
The members have also expressed concern about the number of complaints and grievances that have been made against Mogo Auto Limited, one of the companies engaged in the provision of asset financing and lending services.
The association wants MPs to verify that the interest rates and charges levied on their members for motorcycle loans align with the requirements of the CBK.
“The company imposes excessively high interest rates and other charges, exposing borrowers to financial hardship and exploitation,” the petition states.
Petitioners cite inadequate disclosure of loan terms, repayment obligations, and charges, thereby limiting borrowers’ ability to make informed decisions and undermining consumer rights guaranteed in the Constitution.
The association states in the petition that members have reported instances where, despite making substantial repayments often exceeding the value of the financed motorcycles, they ultimately do not acquire ownership of the assets.
“The petitioner therefore requests that the National Assembly investigate the operations of Mogo Auto Limited, in order to establish whether it complies with the legal and regulatory framework governing lending and asset financing services. The National Assembly should then recommend appropriate legislative, regulatory and administrative measures, to protect bodaboda riders and other borrowers from exploitation, intimidation and unfair business practices.”
The petition and legislative proposal will protect Kenyans from exploitation through punitive interest rates and expensive loans in a largely unregulated sector.
