Kenya is considered one of the most robust innovation hubs in Sub-Saharan Africa. It is ranked second after South Africa by the  World Intellectual Property Organization.

Over the past two decades, fin-tech innovations have been mushrooming in the country, with mobile financial apps being the most popular. According to Communications Authority of Kenya, the number of mobile money subscriptions stood at about 67 million by  June 2021. FSD Kenya estimates that there are over 50 lending apps with approximately 7 million active members, some of them borrowing from more than 10 lenders at the same time. In fact, the Digital Lenders Association of Kenya indicated in 2020 that its members were providing about KSh4 billion worth of credit every month on average pre- Covid-19 pandemic. This is largely attributed to significant strides in increasing access to mobile telephony, interment and broadband services and progressive legal and policy environment in the country’s ICT sector.

Source: Mutei Advocates

Across the East African region, the fin-tech revolution has equally been experienced. In Tanzania and Uganda, the Fintech industry has had a significant growth in the last decade. Although the market is still small in Uganda, the average annual growth rate over the past two years has been approximately 35%, according to FSD Uganda. According to the Bank of Tanzania, around 43% of Tanzanians actively use mobile services. The presence of digital lenders and the interconnection between providers such as banks, finance institutions and mobile operators has facilitated financial inclusion in Tanzania which now stands at 56%. Out of the 56%, 55% are financially included through mobile money accounts.

These thriving Fintech innovations have also spawned digital money lenders, offering quick loans. Loans are processed instantly or within 24 hours and sent to borrowers’ mobile money accounts. Due to their convenient access on mobile phones, digital loans have had explosive growth over the past decade. Comparing Zoom webinar vs meeting: Which is Best for Your Business?

Source: Techweez.com

Despite the declines occasioned by pandemic-induced economic downturns, digital lending still remains a lucrative industry, attracting many players. Digital lending apps have made it easy for people who do not have formal bank accounts or stable source of income to access credit, thus expanding financial inclusion in Kenya, from 26.7% in 2006 to 83% in 2019. According to a report by FSD Kenya, 35% of people who borrow loans use it for consumption,37% for business and 7% for emergencies.

Although digital lenders have created a getaway for empowerment and opportunities financial inclusion, some have been accused of engaging in unethical practices such as predatory lending, levying high interest rates and data breaches. This is compounded by lack of adequate education of users on the terms and conditions, limitations in financial and digital literacy and an underdeveloped regulatory environment.

According to a survey by FSD Kenya, most of the 13.6% of Kenyans who owe digital lenders do not clearly understand the terms and conditions. Also, desperate borrowers often unknowingly surrender important personal data to third parties by agreeing to terms and conditions that they do not understand. This exposes them to the risk of invasion of privacy, appropriation of private data as they unwittingly grant lending apps access to their contact lists, text messages and financial history among other sensitive and proprietary information.

They target the poor and desperate youth and women and coerce them through constant unsolicited text messages of readily available loans. Women are particularly susceptible due to lack of collateral to take loans from traditional lenders.

Unlike traditional banks, digital lenders do not run credit risk assessments. They rely on borrowers’ willingness, as opposed to capacity, to repay, which leaves them with many defaulters. Some charge high interest rates of up to 43%, leaving many Kenyans indebted and in poverty traps.

The limited regulation in the sector has resulted in some digital lenders engaging in unethical practices like debt shaming. Some have been accused of contacting defaulters’ friends and family demanding payment, with threats.

Recently, there have been several legislative proposals presented to parliament aimed at addressing the regulatory gaps in the sector. For instance, in 2018, the National Treasury drafted the Financial Markets Conduct Bill, aimed at regulating consumer credit providers but it never saw light of day as it was never tabled in parliament. In  August 2021, Parliament passed the Central Bank of Kenya Amendment Bill that aims to regulate the business of digital lending and safeguard interests of consumers of digital lending products. It seeks to curb steep digital lending rates and rogue actors who use debt shaming to collect repayment. The law allows the Central Bank of Kenya to control products put out by digital lenders as well as borrowers’ data.

However, it allows digital lenders access to Credit Information Systems (CIS) and empowers them to list Kenyans who have defaulted their loans on Credit Reference Bureaus (CRB). This move is likely to spike the number of Kenyans listed in the CRB. The CBK has also been allowed to license digital lenders and also set parameters for pricing digital loans. Digital lenders have six months to comply with the new regulations and the CBK has 60 days to respond to license applications.

Although it is important to regulate the sector, the CBK law might have adverse effects on the very consumers that it seeks to protect by regulating the interest rates and capital requirements. Lenders are required to expressly announce their interest rates when advertising. Digital lenders do not require any securities for them to lend out money which justifies their high interest rates, just in case the borrower defaults payment. Currently, digital lenders don’t pay any fee to operate in the country but with the enactment of the new law, they will be required to apply for a license and accompanied by a fee as may be prescribed. It also requires one to be incorporated as a company and an agreement with the telecommunications provider that will provide the platform for digital lending services. These requirements might limit innovation due to increased costs and uncertainty in the market.

Kenyans who previously relied on these digital lending platforms to empower themselves might not have anywhere to turn to as traditional banks require securities before lending out money. Protecting consumers will stifle the digital lending industry therefore there it would be advisable for the government to strike a balance with the stakeholders involved in the sector.

The Covid-19 pandemic has brought significant challenges to public forums, especially those of a political or civic kind.

Given that public health considerations take precedence over social engagements, conventional forms of engagements have been crippled or rendered rudderless. Politicians, particularly, have been hit hard by the Covid-19 pandemic, necessitating a complete change in their public engagements. Except for isolated cases reeking of selfish defiance, restrictions to curb the spread of the virus have made it impossible to hold political gatherings, as was previously the norm. Consequently, some overly vocal figures on the political scene have gone unnoticeable for months.

Attempts to restructure some predominant physical engagements to adapt to reality of the pandemic have so far fallen short of expectation. Further, in countries like the United States, defiance and denial of the magnitude and seriousness of the pandemic has come with irreversible consequences, as evident from the high number of infections and deaths.

Notably, politicians and other public figures have recognised the power of digital platforms as an alternative means of engaging with the masses. In recent days, political activity on social networks has grown exponentially. Discussions on social networking sites have led to youth engaging more on political issues. According to UNICEF, youth today use digital platforms to establish their civic identities and declare political stances. Through these modes, youth can now voice concerns and table their agenda, unlike in the past where they remained marginalised.

Recent happenings globally prove that the digital world is equally, if not more, powerful. The world witnessed Black Lives Matter protests accelerate from the epicentre in Minnesota throughout the United States and across the vast Pacific and Atlantic oceans to Australia and the United Kingdom. This was one of the greatest testaments of the power of digital platforms.

Black Lives Matter Protests | Source: CNN

Similar occurrences have also been witnessed in Sub-Saharan Africa. In Uganda, the rise of ‘People Power’ has been largely attributable to social media activism by Robert Kyagulanyi – Bobi Wine – who has stood firmly against oppression by the current regime. Not to forget embers of the Arab Spring that were blown into a raging inferno online.

Arab Spring Protests in Egypt | Source: Reuters

From these, it is evident that the world’s interconnectedness, thanks to the digital revolution has made it easier for humans to form communities, uniting strangers around a common cause, ideal, or belief. In a world where even those who reside in remote places can access the internet, it only takes a post on Facebook, a hashtag, or a branded social media avatar to stir a revolution.

With the Covid-19 restrictions, there has been a meteoric rise in creation and sharing of digital content, to cater for grounded audiences. Zoom meetings and webinars have become the norm, especially for leaders striving to sustain their potency. However, there is a striking contrast in the nature of engagement on digital platforms compared to what is typical of political rallies and gatherings. Given discussions online are topical, leaders have to demonstrate ability to articulate their ideas clearly and defend their ideals in a manner that resonates with citizens if they are to be granted an audience. The mass hysteria characteristic of political rallies and other traditional forms of engagement that politicians often ride on, no longer exists. Citizens are also forced to be more critical of information shared by leaders.

Amplification of digital civic engagement is a premonition of things to come. While traditional, in-person forms of civic engagement cannot be completely eradicated, time is ripe to fully go digital and strengthen frameworks that facilitate the same. A critical element remains improving access to quality and reliable information which the nature and quality of online discussions are dependent on. Over the years, Kenya has made significant strides in enhancing access to public information, a right prescribed and guaranteed in the Constitution. However, existing frameworks remain weak, as critical information regarding public debt, tendering processes, procurement and budget remains difficult to access.

The desired success can only be attained through inter-ministerial synergies to ensure established frameworks are firm, functional and incorruptible. Success is also predicated in enhancing digital infrastructure, granting those in rural and marginalized areas a unique focus to ensure their voices and concerns are sufficiently represented.

It is also important to pay attention to deterring rampant sharing of fake news and disinformation through digital platforms. While online platforms provide avenues for reaching wide segments of the population, it also makes it easier to share fake news and misinform the public, thus shadowing and diluting quality of online engagements. To counter such, it is also important that efforts be channeled towards equipping citizens, particularly the youth, with media and information literacy skills to increase their capacity to create, consume, critique and disseminate online information. One such initiative is the recent Media and Information Literacy training by the Africa Center for People Institutions and Society supported by UNESCO.

Online Training on Stimulating Youth Civic Engagement Through Media and Information Literacy | Source: Acepis

Considering the increasing cases of cyber-bullying, it is also important to have candid conversations regarding how best to put together safeguards, in  the form of law or policy. This will ensure digital safety for billions of users across the world, especially young people.

Digital civic engagement is gaining traction and will outlast the Covid-19 era. This ushers in a new era that promotes inclusion of youth and other groups that have traditionally been excluded and unheard in decision-making processes. It is an era where every member of the society has equal opportunity to establish their civic identities, elevating them to a better position to be diligent and active in performing their civic duties.

Overall, investment in strengthening digital civic engagement mechanism is in a worthwhile endeavor that must be encouraged if we are to foster responsible citizenry moving forward, post-Covid pandemic.