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Watu Credit Limited, a Pan-African asset financing firm, has come under scrutiny by the Parliamentary Finance Committee over allegations of exploitative lending practices towards boda boda operators. This inquiry, part of a broader investigation into credit lenders, aims to assess the systemic risks posed by widespread and unregulated “Buy Now, Pay Later” services.
The Committee’s focus included concerns about over-indebtedness, default rates, and the financial stability of boda boda riders. Watu Credit revealed that they have contributed over Kshs. 5 billion in taxes to the Kenya Revenue Authority since their inception but have incurred over Kshs. 1 billion in losses. However, they admitted to operating without a regulatory framework governing their client relationships.
Watu’s CEO, Mr. Andris Kaneps, and Country Manager, Mr. Eric Massawe, explained that all transactions are conducted via M-Pesa and that they rely on commercial loans from Kenyan banks with interest rates averaging 20%. The total cost of ownership for customers is calculated at 103% annually, a figure the Committee found exploitative.
The inquiry also highlighted gaps in the regulatory regime, with Kenya being the only country among the seven where Watu operates that lacks specific regulations for non-deposit asset financing. Concerns were raised about the tracking system installed on motorcycles, which riders claimed they could not keep post-loan completion.
Chairperson Hon. Kuria Kimani questioned why the logbooks are registered solely in Watu Credit’s name, leaving clients vulnerable in case of accidents. Additionally, the practice of renaming repossessed motorcycles under Watu Nominees Company, a subsidiary, was scrutinized.
The CEO acknowledged the regulatory gaps and agreed to investigate and compensate riders who reported stolen motorcycles. The Committee emphasized the need for a business environment that protects customers from exploitation. Watu Credit committed to cooperating with the ongoing probe and supporting legislative interventions to address these issues.