[kictanet] Kenya IGF Online Discussions. Day 3. Developments in Fintech and E-commerce

David Indeje davidindeje at gmail.com
Thu Jul 12 20:44:24 EAT 2018


The World Bank, in a paper says "There are several policy alternatives that
can both protect borrowers from excessive interest rates and limit the
negative consequences of interest rate caps. These include wider adoption
of credit scoring through credit bureaus so banks can differentiate lenders
based on risk; more efficient loan foreclosure procedures and movable
collateral registries; and greater emphasis on strengthening consumer
protection measures through debt counseling and streamlined redressal
mechanisms."
http://blogs.worldbank.org/allaboutfinance/cap-or-not-cap-what-does-kenya-s-experience-tell-us-about-impact-interest-rate-caps-financial-sector

On Thu, 12 Jul 2018 7:19 pm Grace Bomu via kictanet, <
kictanet at lists.kictanet.or.ke> wrote:

> If credit rating pushes people out of the credit system, then we shouldn't
> be surprised at the acceptance of alternative finance like
> cryptocurrencies.
>
> Il giovedì 12 luglio 2018, Ali Hussein via kictanet <
> kictanet at lists.kictanet.or.ke> ha scritto:
>
>> Alex
>>
>> Thanks for that. You are quite right. Someone within the CRB space one
>> told me that if you apply for a loan for the first time your score is
>> pretty low because of the fact that there is no data on you.
>>
>> Regards
>>
>> *Ali Hussein*
>>
>> *Principal*
>>
>> *AHK & Associates*
>>
>>
>>
>> Tel: +254 713 601113
>>
>> Twitter: @AliHKassim
>>
>> Skype: abu-jomo
>>
>> LinkedIn: http://ke.linkedin.com/in/alihkassim
>> <http://ke.linkedin.com/in/alihkassim>
>>
>>
>> 13th Floor , Delta Towers, Oracle Wing,
>>
>> Chiromo Road, Westlands,
>>
>> Nairobi, Kenya.
>>
>> Any information of a personal nature expressed in this email are purely
>> mine and do not necessarily reflect the official positions of the
>> organizations that I work with.
>>
>> On Thu, Jul 12, 2018 at 12:36 PM, Alex Watila via kictanet <
>> kictanet at lists.kictanet.or.ke> wrote:
>>
>>> Good afternoon,
>>>
>>> It actually is happening in Kenya. The longer you stay without a loan
>>> the lower your score becomes.
>>>
>>>
>>>
>>> Also in the western world, people that do not need a loan still take
>>> them to keep up their credit scores.
>>>
>>>
>>>
>>> Call it the cost of living in a data analytics driven world or is it
>>> wrong assumptions built into the algorithms?
>>>
>>>
>>>
>>> Regards,
>>>
>>>
>>>
>>> Alex Watila
>>>
>>>
>>>
>>> *From:* kictanet <kictanet-bounces+awatila=
>>> yahoo.co.uk at lists.kictanet.or.ke> *On Behalf Of *Grace Bomu via kictanet
>>> *Sent:* Thursday, July 12, 2018 10:19
>>> *To:* awatila at yahoo.co.uk
>>> *Cc:* Grace Bomu <nmutungu at gmail.com>
>>> *Subject:* Re: [kictanet] Kenya IGF Online Discussions. Day 3.
>>> Developments in Fintech and E-commerce
>>>
>>>
>>>
>>> @ Indeje, I wonder whether we are being driven to a "you must have a
>>> credit score" world and thereby a situation where one might have to take a
>>> loan just to get a credit score.
>>>
>>>
>>>
>>> 2018-07-12 10:12 GMT+03:00 David Indeje via kictanet <
>>> kictanet at lists.kictanet.or.ke>:
>>>
>>> As regards 3. How about the Credit Reference Bureaus? Are they stuck in
>>> a time warp or is the legislation in place encumbering them from
>>> innovation?
>>>
>>>
>>>
>>> I once spoke to KBA's Dr. Habil Olaka and he noted that the CRB's role
>>> in the market has not been achieved as it is currently constituted.
>>>
>>> According to him, CRB was not to play the role of blacklisting persons
>>> who have defaulted but rather to inculcate an environment where people
>>> become responsible and
>>>
>>> similarly,
>>>
>>> help financial institutions to better price a person who is seeking
>>> financial help.
>>>
>>>
>>>
>>> This is a reason that led to the launch of the Loan Calculator by the
>>> KBA. There reasoning was it is better to get a loan from a bank rather than
>>> the mobile lending platforms.
>>>
>>>  However, in line with what @GraceBomu notes on mobile lending, FSD in
>>> their 2017 report
>>> <http://fsdkenya.org/annual-report/2017-annual-report/> recommended
>>> that "As the market for digital loans grows and diversifies, further
>>> research is needed to help build a more complete and timely picture of how
>>> and whether these products can improve Kenyans’ lives."
>>>
>>>
>>>
>>> On Regulation: CBK has the best answer on how it regulates mobile
>>> lending institutions so that they are differentiated from the banks.
>>> However, I agree with BBK MD Jeremy Awori who says "Excessive control and
>>> regulation does not help the market. This is adding a lot of bureaucracy
>>> and cost, which will find its way to the charges of products" he spoke this
>>> yesterday.
>>>
>>> Same sentiments have been raised by Safaricom and also the CBK
>>> <https://www.businessdailyafrica.com/markets/marketnews/Proposed-finance-law-will-cripple-CBK--says-governor/3815534-4585524-dt5vtiz/index.html>
>>> as regards to the new Financial bill
>>>
>>>
>>>
>>>
>>>
>>> *Kind Regards,*
>>>
>>> *David Indeje *
>>>
>>>
>>>
>>>  +254 (0) 711 385 945|  +254 (0) 734 024 856      Khusoko
>>> <http://bit.ly/2eJF9B4>
>>>
>>>   <https://www.facebook.com/DavidIndeje/>
>>> <https://twitter.com/David_Indeje>
>>> <http://ke.linkedin.com/pub/david-indeje/17/7b9/647>  Skype:
>>> david.indeje
>>>
>>>
>>>
>>>
>>>
>>> On Thu, 12 Jul 2018 at 09:47, Grace Bomu via kictanet <
>>> kictanet at lists.kictanet.or.ke> wrote:
>>>
>>> Hi Ali,
>>>
>>> ​With regard to the question of mobile money lending, it is a subset of
>>> micro finance in many ways. It definitely ​leads to more financial
>>> inclusion for the unbanked and provides credit to those who would normally
>>> not be targeted by banks. However, the interest rates are sometimes so high
>>> that one wonders if the goal is financial inclusion or bondage through
>>> credit. There needs to be more transparency by the lending apps not only
>>> about their rates but how these are derived, what data they hold and for
>>> how long. The money lending apps are also marketed in isolation from other
>>> important information that one needs in order to make the most out of
>>> credit. In comparison to microfinance for example, the institutions take
>>> time to educate borrowers about finance, business plans, loan repayment
>>> plans etc. There are also social structures like women groups or SACCO
>>> groups that assist borrowers to reach their goals with the money they
>>> borrowed. This is a gap with mobile money lending apps which are more
>>> impersonal and agnostic about the purposes for borrowing.
>>>
>>>
>>>
>>>
>>>
>>> ​Regards​,
>>>
>>>
>>>
>>>
>>>
>>> Il giovedì 12 luglio 2018, Ali Hussein via kictanet <
>>> kictanet at lists.kictanet.or.ke> ha scritto:
>>>
>>> Dear listers.
>>>
>>>
>>>
>>> Since the advent of Mpesa, Kenya has been recognized as Ground Zero for
>>> Mobile Money/Payments Innovation the world over. According to a World Bank
>>> report one in every ten human beings regularly using mobile money is a a
>>> Kenyan.
>>>
>>>
>>>
>>> Over the last few years Fintech (Financial Technology) has become all
>>> the rage. American startups are setting up in Kenya. The more common ones
>>> that we know are Branch and Tala who combined have raised over $150m of
>>> venture funds in the last few years. These two are mainly mobile lending
>>> platforms. Insuretech is taking root. Payment Platforms are proliferating.
>>> Banks are jumping onto the Fintech Bandwagon with mainstream banks like
>>> Barclays and HF Group launching their mobile lending apps. Equity Bank
>>> boldly announced a few weeks ago that they are building an API Bank.
>>> Banking as a Service as it were.
>>>
>>>
>>>
>>> Not to be left out, Blockchain and it’s offspring, Bitcoin is threading
>>> to complete the upheavals in the financial sector. On top of it all the
>>> government is playing catch up on regulation with the announcement of the
>>> Finance Bill 2018. See analysis from KPMG on this.
>>>
>>>
>>>
>>>
>>> https://home.kpmg.com/ke/en/home/insights/2018/06/finance-bill-2018-analysis.html
>>>
>>>
>>>
>>> To ponder:-
>>>
>>>
>>>
>>> 1. Are we moving too fast? Is there a need to take a chill pill and
>>> reflect on the gains and achievements of the sector?  Should we regulate
>>> lightly or heavily?
>>>
>>>
>>>
>>> 2. Should we regulate and cap the mobile lending platforms? Are they
>>> playing a crucial role of financial inclusion or are they just loan sharks
>>> on steroids?
>>>
>>>
>>>
>>> 3. How about the Credit Reference Bureaus? Are they stuck in a time warp
>>> or is the legislation in place encumbering them from innovation?
>>>
>>>
>>>
>>> 4.  Lastly is the BlockChain conversation being overhyped? And how do
>>> you separate the technology from the cryptocurrencies it spawns?
>>>
>>>
>>>
>>> Over to you Listers.
>>>
>>> *Ali Hussein*
>>>
>>> *Principal*
>>>
>>> *AHK & Associates*
>>>
>>> +254 0713 601113
>>>
>>>
>>>
>>> Twitter: @AliHKassim
>>>
>>> Skype: abu-jomo
>>>
>>> LinkedIn: http://ke.linkedin.com/in/alihkassim
>>>
>>>
>>>
>>> "We are what we repeatedly do. Excellence, therefore, is not an act but
>>> a habit."  ~ Aristotle
>>>
>>>
>>>
>>>
>>>
>>> Sent from my iPad
>>>
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>>>
>>> --
>>>
>>> Grace Mutung'u
>>> Skype: gracebomu
>>> @Bomu
>>> PGP ID : 0x33A3450F
>>>
>>>
>>>
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>>> regulation. The network aims to act as a catalyst for reform in the ICT
>>> sector in support of the national aim of ICT enabled growth and development.
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>>> KICTANetiquette : Adhere to the same standards of acceptable behaviors
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>>>
>>>
>>
>
> --
> Grace Mutung'u
> Skype: gracebomu
> @Bomu
> PGP ID : 0x33A3450F
>
>
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> The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform
> for people and institutions interested and involved in ICT policy and
> regulation. The network aims to act as a catalyst for reform in the ICT
> sector in support of the national aim of ICT enabled growth and development.
>
> KICTANetiquette : Adhere to the same standards of acceptable behaviors
> online that you follow in real life: respect people's times and bandwidth,
> share knowledge, don't flame or abuse or personalize, respect privacy, do
> not spam, do not market your wares or qualifications.
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