Grace Ashiru
Kenyan lawmakers are intensifying scrutiny of Buy Now, Pay Later (BNPL) financing companies following growing complaints about alleged consumer exploitation, excessive lending charges and questionable debt recovery practices.
The National Assembly’s Finance and National Planning Committee is preparing to engage the Central Bank of Kenya (CBK) and financing companies to examine consumer protection measures within the rapidly expanding sector.
The committee, chaired by Molo Member of Parliament Kuria Kimani, is particularly concerned about motorcycle asset financing arrangements and other credit products that allow customers to acquire goods through instalment payments.
Lawmakers want financing companies to provide detailed information about their lending practices, customer registration procedures, licensing status and compliance with existing financial regulations.
The parliamentary review follows complaints from borrowers who allege that some financing arrangements expose customers to high repayment costs and unfair treatment when they experience difficulties meeting their obligations.
Kimani has warned that companies failing to honour parliamentary invitations could face action under the National Assembly’s Standing Orders.
Kenya’s BNPL market has experienced significant growth, supported by widespread mobile money usage, increasing smartphone adoption and demand for alternative financing options.
The payment model enables consumers to purchase products immediately while spreading payments over an agreed period, making it attractive to individuals and small businesses unable to afford substantial upfront costs.
Companies operating in Kenya’s broader instalment financing market include Lipa Later and M-KOPA, which offer financing solutions to consumers.
However, concerns have emerged over the transparency of financing agreements, additional charges and methods used to recover outstanding debts. These are sector-wide concerns and do not establish wrongdoing by the companies named above.
Kenya has been strengthening its regulatory framework to address these challenges. Amendments introduced through the Business Laws (Amendment) Act, 2024 expanded the CBK’s authority over non-deposit-taking credit providers, including certain BNPL and asset financing businesses.
The central bank has also developed regulations intended to strengthen supervision of credit providers and improve consumer safeguards.
Lawmakers are expected to examine whether lenders adequately explain repayment obligations, assess customers’ ability to repay and follow acceptable procedures when recovering financed assets.
The parliamentary investigation could lead to closer regulatory oversight and stronger enforcement of consumer protection requirements.
While BNPL services provide an important financing alternative for many Kenyans, policymakers face the challenge of protecting borrowers without unnecessarily restricting access to credit.
The outcome of the review could influence how digital lenders and asset financing companies operate in Kenya’s evolving financial technology market.
