Overpriced digital loans in Kenya have become a “huge burden to the consumer” during the Covid-19 pandemic, says Kellie Charlotte, a financial analyst with Maitri Capital in Nairobi. Lack of regulation has left some digital lending apps charging annualized interest rates of between 150% and 500%, she says.
In January 2020, Opera, a provider of short-term mobile loans in Kenya, Nigeria and India which trades on Nasdaq, rejected claims by Hindenburg Research that annual lending rates alleged to range from 365% to 876% were predatory.
READ MORE Opera denies Hindenberg claims of “predatory” loans in Nigeria, Kenya
The problem extends beyond Kenya. According to research from the Consultative Group to Assist the Poor (CGAP), which analysed data from over 20 million digital loans in Tanzania, most borrowers use digital credit for discretionary consumption, rather than for productive
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