Responsible lending must lead the way for Kenyans to prosper

At its core, responsible finance is about striking a careful balance between profitability and minimising harm to the consumer.

No company operates in a vacuum. Our success is symbiotically tied to the trust and participation of our customers. When their rights are neglected or their obligations ignored, the social contract that underpins financial services begins to erode.

Fair and respectful treatment of clients is not only a moral imperative but also essential for sustainable business growth.

The recent announcement by the Central Bank of Kenya (CBK) approving 41 additional Digital Credit Providers (DCPs), bringing the total to 126, is a positive and necessary step toward protecting Kenyan consumers from predatory lenders. It signals a broader shift toward responsible digital lending in Kenya.

According to the Consultative Group to Assist the Poor report on consumer protection regulation in low-access environments, transparent disclosure of loan terms can significantly reduce borrowing costs.

This means that consumers must be given clear, jargon-free information about repayment terms, well before they commit.

Licensing of DCPs carries several key benefits for consumers, such as consumer protection by requiring regulated lenders to provide transparent loan terms, helping consumers understand interest rates, fees, and repayment obligations.

This curbs exploitative practices such as hidden charges and unmanageable interest rates. Additionally SMS notifications, public awareness campaigns and standardised product disclosures further empower consumers.

Equally important is dispute resolution. Regulated DCPs must offer accessible, responsive channels for handling complaints. These steps build trust, and that builds loyalty. When people feel protected, they not only repay, but they also recommend.

CBK’s vetting process reinforces public trust and confidence in credit providers. When consumers feel protected and fairly treated, they are more likely to recommend services through word of mouth, arguably the most powerful form of brand endorsement.

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Beyond individual benefits, responsible finance has broader socio-economic implications. When breadwinners can access fair and transparent credit, they are better equipped to sustain their livelihoods.

For example, financing for motorcycles or tricycles for business enables individuals to continue working, support their dependents, and drive local economic activity. This contributes to greater financial inclusion, especially for informal workers and SMEs, which fosters entrepreneurship, job creation, and economic participation.

Ultimately, responsible finance benefits both institutions and clients. It fosters a sustainable ecosystem where trust, transparency, and long-term value prevail over short-term gain and exploitation.

When implemented effectively, it enables individuals to understand financial commitments from the outset, plan responsibly, and contribute meaningfully to national development.

The writer is the Country Manager at Watu