The Allure and Pitfalls of Kenya’s BNPL Boom
In Nairobi’s bustling streets, where motorbike taxis weave through traffic and smartphones light up conversations, the buy now, pay later (BNPL) trend is rewriting the rules of commerce. For many, the allure of affordable installments for big-ticket items like motorbikes, solar panels, and smartphones has been irresistible. But behind the gleam of accessible credit lies a web of challenges, as consumers grapple with high interest rates and predatory lending practices. With real wages eroded by inflation and unemployment lingering, BNPL has become a double-edged sword for Kenyans looking to keep pace with modern life.
Regulatory storm clouds, however, are gathering on the horizon. Parliament’s proposed amendments to the Business Laws bill aim to rein in the industry, granting the Central Bank of Kenya authority to oversee interest rates. The push comes in response to stories like a boda boda rider who struggles to meet daily loan repayments for his motorbike amid rising costs for essentials like food and fuel. These stories have sparked nationwide scrutiny of BNPL firms accused of exploiting low-income earners with opaque terms and aggressive loan recovery practices.
The looming changes have left the sector at a crossroads. While e-commerce startups like LipaLater and Britain’s M-Kopa have thrived, even drawing major banks and Safaricom into the BNPL fold, the regulatory shake-up could challenge their business models. Safaricom’s exemption for its Lipa Mdogo Mdogo program highlights the clout of big players, but smaller firms face a tougher road ahead. For lawmakers like Kamau Munyoro, who’s championing consumer protection, the mission is clear: “We can’t let an unregulated system turn dreams into nightmares.” As Kenya balances innovation with oversight, the future of BNPL hangs in the balance.
(Source: Semafor | The Eastleigh Voice)
