For the first time, the Competition Authority of Kenya (CAK) has been compelled to seriously get to the bottom of digital lenders following a blow-up of cases of consumer exploitation. High interest rates, short repayment periods, and murky loan contracts have been cited as the major forms of abuse.
“We are looking into the sector because of many complaints that we’re getting – complaints about interest rates being too high, use of different currencies, and non-disclosure of information when contracting the loan. “– CAK Director General, David Kemei.
The authority said it has received many complaints about financial oppression, including cases where lenders charge interest rates of up to 40% with repayment periods as short as one month. On other occasions, borrowers have been asked to pay in US dollars.
This comes as shoppers on popular Buy Now Pay Later financing options are facing higher product prices after the introduction of lending charge and exercise duty on their services by the treasury, in light of an amendment on the Finance Act 2025 that re-defines who a ‘digital lender’ is.
CAK opened 858 consumer protection investigations between June of this year and June of last year, a 28% increase from 668 the previous year.
The CBK, which provides regulatory oversight on the digital lenders, does not set interest rates for them. This provides room for the digital lenders to write their own rules.
In a bid to curb unscrupulous lending, the CAK is suggesting amendments to the Competition Act to have the authority to control the online lending space. The Central Bank of Kenya (CBK) has also initiated an evaluation of the digital credit provider regulations, aiming to widen its oversight and bolster consumer protection.
