Digital Lenders Association of Kenya (DLAK)

The Digital Lenders Association of Kenya (DLAK) is a non-profit organization that represents the interests of digital lending platforms in Kenya.

The association was established in 2019 with the aim of promoting responsible lending practices, protecting the rights of borrowers, and advocating for a conducive regulatory environment for digital lending in Kenya.

In this essay, we will discuss the history, structure, activities, and impact of the Digital Lenders Association of Kenya.

History of DLAK

The idea of establishing a digital lenders association in Kenya was first proposed in 2018 by a group of digital lending companies. The companies felt that they needed a platform to represent their interests and advocate for a conducive regulatory environment for digital lending in Kenya. In February 2019, the Digital Lenders Association of Kenya was officially launched with seven founding members, including Tala, Branch, Zenka, Okolea, MyCredit, Lendable, and Alternative Circle.

Structure of DLAK

The Digital Lenders Association of Kenya is governed by a board of directors that is elected by the members. The board is responsible for setting the association’s strategic direction, developing policies, and overseeing the day-to-day operations of the association. The current board of directors is chaired by Kevin Mutiso, the CEO of Alternative Circle.

DLAK has a secretariat that is responsible for the association’s day-to-day operations. The secretariat is headed by the executive director, who is responsible for implementing the board’s policies and managing the association’s staff.

Digital Lenders Association of Kenya Membership

DLAK membership is open to all digital lending platforms that are licensed by the Central Bank of Kenya (CBK) and adhere to the association’s code of conduct. The association currently has 16 members, including Tala, Branch, Zenka, Okolea, MyCredit, Lendable, Alternative Circle, PesaZone, Pezesha, Stawika Capital, KopaCash, KCB-M-Pesa, UbaPesa, HF Whizz, LPesa, and Eazzy Loan.

DLAK Activities

The Digital Lenders Association of Kenya engages in various activities to promote responsible lending practices, protect the rights of borrowers, and advocate for a conducive regulatory environment for digital lending in Kenya. Some of the key activities of the association include:

1. Developing a Code of Conduct for Digital Lenders

DLAK has developed a code of conduct that outlines the ethical and responsible practices that digital lenders should adhere to when providing credit to customers. The code of conduct is based on the principles of transparency, affordability, and responsible lending. All DLAK members are required to adhere to the code of conduct, which is enforced by the association’s board of directors.

2. Advocating for a Conducive Regulatory Environment

DLAK advocates for a regulatory environment that promotes innovation and growth in the digital lending industry while protecting the rights of borrowers. The association engages with policymakers, regulators, and other stakeholders to promote policies that support responsible lending practices, consumer protection, and financial inclusion.

3. Conducting Research and Analysis

DLAK conducts research and analysis on various aspects of digital lending in Kenya. The association collaborates with research institutions, academics, and other stakeholders to produce reports, papers, and other publications that provide insights into the digital lending landscape in Kenya. Some of the topics that DLAK has researched include the impact of digital lending on financial inclusion, the role of credit scoring in digital lending, and the impact of interest rate caps on the digital lending industry.

4. Consumer Education and Protection

DLAK is committed to promoting financial literacy and consumer protection among digital borrowers. The association provides educational materials and resources to help borrowers understand their rights and responsibilities when borrowing from digital lenders. DLAK also works with consumer protection agencies to ensure that borrowers are protected from predatory lending practices.

5. Capacity Building and Networking

DLAK organizes capacity-building workshops, seminars, and conferences for its members and other stakeholders. These events provide a platform for digital lenders to learn from each other, share best practices, and network with other players in the industry.

The association also partners with other organizations to organize events that promote financial inclusion and digital innovation.

Impact of Digital Lenders Association of Kenya

Since its establishment in 2019, the Digital Lenders Association of Kenya has made significant contributions to the digital lending industry in Kenya. Some of the key impacts of the association include:

1. Promoting Responsible Lending Practices

DLAK has played a crucial role in promoting responsible lending practices among digital lenders in Kenya. The association’s code of conduct has helped to improve transparency and affordability in the industry, thereby protecting borrowers from predatory lending practices. DLAK’s advocacy efforts have also contributed to the development of a regulatory environment that supports responsible lending practices and consumer protection.

2. Enhancing Consumer Protection

DLAK’s focus on consumer education and protection has helped to enhance the rights and welfare of digital borrowers in Kenya. Through its educational materials and resources, the association has helped to empower borrowers with knowledge of their rights and responsibilities.

DLAK has also worked closely with consumer protection agencies to ensure that borrowers are protected from predatory lending practices.

3. Fostering Innovation and Growth

DLAK has helped to foster innovation and growth in the digital lending industry in Kenya. The association’s advocacy efforts have contributed to the development of a regulatory environment that supports innovation and growth. DLAK’s capacity-building events have also provided a platform for digital lenders to learn from each other, share best practices, and network with other players in the industry.

4. Contributing to Financial Inclusion

DLAK’s activities have contributed to the promotion of financial inclusion in Kenya. The association’s focus on responsible lending practices and consumer protection has helped to build trust between borrowers and digital lenders. This has encouraged more people to access credit from digital lenders, thereby promoting financial inclusion.

Challenges Facing DLAK

Despite its successes, the Digital Lenders Association of Kenya faces several challenges that could affect its ability to achieve its goals. Some of the key challenges facing DLAK include:

1. Lack of Regulatory Clarity

The digital lending industry in Kenya operates in a regulatory grey area, with no clear guidelines on the licensing, operation, and supervision of digital lenders. This lack of regulatory clarity makes it difficult for DLAK to advocate for policies that support responsible lending practices and consumer protection.

2. Competition Among Digital Lenders

Competition among digital lenders in Kenya is intense, with many players vying for a share of the market. This competition can lead to the adoption of aggressive marketing tactics and predatory lending practices, which can harm borrowers and undermine the industry’s reputation.

3. Limited Resources

As a non-profit organization, DLAK has limited resources to implement its activities. The association relies on the contributions of its members to fund its operations, which can limit its capacity to undertake large-scale projects and initiatives.

Conclusion

The Digital Lenders Association of Kenya is a non-profit organization that represents the interests of digital lending platforms in Kenya.

The association has made significant contributions to the digital lending industry in Kenya, promoting responsible lending practices, protecting the rights of borrowers, and advocating for a conducive regulatory environment for digital lending.

However, the association faces several challenges, including a lack of regulatory clarity, competition among digital lenders, and limited resources.

Addressing these challenges will require collaboration among stakeholders, including policymakers, regulators, digital lenders, and consumer protection agencies, to ensure that the digital lending industry in Kenya continues to grow and contribute to financial inclusion.