MPs consider new laws to shield boda bodas from rogue lenders

National Assembly’s Departmental Committee on Finance and National Planning is considering enacting regulations to guide the operations of the Buy-Now-Pay-Later (BNPL) credit providers, to protect boda boda operators from further exploitation by lenders.

Led by Kuria Kimani, the MP for Molo and chair, the committee assured boda boda operators that it will come to their aid as they have for long suffered in the hands of rogue lenders.

The committee further revealed that it will be engaging with the Competition Authority of Kenya (CAK) and the Insurance Regulatory Authority (IRA) to get insights on how to tighten regulations that govern the lenders.

Buy now, pay later (BNPL) is a type of short-term financing that allows consumers to make purchases and pay for them over time. Consumers can make purchases using BNPL services offered by traditional and online retailers or through apps provided by third-parties.

Investigative agencies

Said Kimani: “We shall be placing advertisements in the dailies next week requesting all those operators affected to come forward and submit their complaints. Since most operators may not access the dailies, I am requesting the Association Chairman to inform them.”

He added: “I feel that we have all failed the boda boda sector. The lenders are operating in a vacuum and that’s why they have taken advantage of many unemployed young people. We also need the investigative agencies to probe the proneness of the loss of motorcycles just when the loanee is about to complete their payment. This is very unusual.”

At a meeting with members of the Kenya Boda Boda Association led by the National Executive chairman Charles Gichira to get insights from the association following claims that the move has affected close to 50 per cent of those who have used the lending facilities, the committee said that there is need to deal with the matter once and for all.

The MPs sought to know the names of the lending companies involved in this form of exploitation so that they could be given a chance to present their case before the committee.

Making their submissions to the committee, the team which said they represent over two million operators across the county, decried that the lenders have turned what was marketed as an accessible path to owning a motorbike and achieving financial independence, as a nightmare.

They noted that many operators are now counting losses after their motorcycles were indiscriminately impounded even when they had less than 10 per cent outstanding loans.

In particular, Gichira expressed concerns that upon payment of deposits amounting to Sh40,000, which covers for insurance and a tracker, the lender remains with a copy of the motorcycle key and insurance details.

Said Gichira: “Chairman, the boda boda operators have gone through untold suffering. We have been lured by borrowers with deceitful deals of low-down payments and easy instalments. We have, however, discovered that what is presented as a good deal, has in fine print, details of hidden fees and exorbitant interest rates with aggressive debt collection tactics.”

The association chairperson Faith Asiba, observed that the influx of motorcycle theft cases when the loanees are about to complete payment has led to suspicions that there is a relationship between those who cause the disappearance of the motorcycles and the lenders.

She said: “It’s quite suspicious that most of those who have lost their motorcycles, including half of us here today, have lost them at night, and when we call the companies to deploy the trackers, they do not respond until morning when the trackers have most likely been disabled. Unfortunately, the insurance companies have not been offering compensation in such cases.”

Consumers’ rights

The matter came to the Committee’s fore after Kigumo lawmaker Joseph Munyoro sought a statement from the chairperson regarding the measures and mechanisms the government has put in place to regulate the activities of BNPL providers in the country, including addressing rogue lending institutions responsible for violations of consumers’ rights.

Seeking the statement on the floor of the House, Munyoro further requested to know the plans the government has put in place to develop alternative financing models that are fair, transparent and genuinely empower the boda boda operators.

He called on the committee to consider effecting a regulatory framework that will shield the operators from exploitative tendencies that are akin to criminal acts.

What is marketed as easy acquisition of motorbikes on cheap loan for business has turned into a nightmare for beneficiaries who have not only lost the boda bodas but also family property used as collateral.