“Buy Now, Pay Later” (BNPL) companies are facing scrutiny for allegedly exploiting Kenyan borrowers.
Kigumo MP Kamau Munyoro recently submitted a petition to Parliament, urging an investigation into BNPL schemes. As a member of the National Assembly’s Finance and National Planning Committee, he raised concerns after a constituent lost a motorcycle despite paying Kes. 250,000 on a Kes. 260,000 loan.
“I questioned how someone could pay so much and still lose the bike. When we summoned these companies, we found that they operated without proper regulations and set their own interest rates,” Munyoro stated.
He emphasized that many young people are desperate to start businesses and often sign contracts without fully understanding the terms.
“They don’t bring lawyers to read the fine print. Instead, they just sign wherever they’re told and leave with the bike,” he added.
Currently, over 16 asset finance firms in Kenya offer BNPL services. Earlier this year, the Central Bank of Kenya (CBK) received more than 500 complaints from consumers about various digital lending platforms, including BNPL services.
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One significant case involved MOGO, which entered the Kenyan market in 2019. After investigating public complaints, the Competition Authority of Kenya (CAK) fined the company Kes. 11 million.
MOGO was also ordered to compensate three customers with Kes. 340,000 for misleading loan terms.
The CAK’s decision to fine MOGO arose from findings that the company engaged in misleading practices in loan administration.
However, Munyoro noted a legal gap, asserting that “they are technically doing nothing wrong because there are no specific laws governing this sector. Parliament needs to step in and create regulations.”
