Google: Loan Apps Will No Longer Access Your Contacts, Calls - Money Weekly

It’s already mid-April! 

In this week's edition of Money Weekly, we look at what has been going on in the financial world. Plans by the government to deduct Ksh17 daily from hustler fund beneficiaries top the list. Still, on NHIF, 80% of NHIF members failed to make their monthly contributions. 

In other news, there is a reprieve for Kenyans as digital loan lenders will be barred from accessing user data starting May 31, 2023, plus other key money news.

As we do every week, here's our summary of the top money news from the last seven days and what they mean for your pocket.

Government to Deduct Ksh17 Daily from Hustler Fund for NHIF

Beneficiaries of the Hustler Fund will have Ksh17 deducted daily and channeled to their National Health Insurance Fund (NHIF) contributions. This action will result in the development of a medical insurance product that will be paid for through deductions from these loans.

On Thursday, April 13, 2023, Cabinet secretary for Cooperatives and Small Enterprises, Simon Chelugui, disclosed that his ministry was in advanced talks with NHIF about redirecting part of the Hustler Fund's borrowed cash to the national health insurer. 

“Alongside that (borrowing) are bespoke products which we will be launching. On universal health coverage, NHIF is engaging with us with a view of also taking out Sh17 per day from these hustlers and putting it in their health insurance,” Mr. Chelugui made the remarks during a manufacturing SMEs convention in Nairobi. 

“This amount will assure them of medical and accident expenses. At least when a hustler is hurt or gets into an accident or is sick, they can walk to any hospital and they will be treated and released. No one will be detained anymore,” he added.

This is a recent development aimed at increasing revenue for the state health financing program, which suffered during the Covid-19 pandemic.

Last year, the government announced plans to restructure the NHIF from an individual contributory scheme to a household contribution model in order to reach a larger population.

However, Mr. Chelugui did not expound on how the funds to be obtained from the hustler fund loans, which roughly match the current minimum monthly premiums of Ksh500 charged by NHIF to those working in the informal sector, will be collected from borrowers.

Read Also: How to Apply for the Hustler Fund on Your Mobile Phone

Google to Prohibit Loan Apps From Accessing User Data

Starting May 31, 2023, digital lending apps on the Google Play Store will not be permitted to access users' contacts, photographs, videos, call records, external storage, and precise location. 

“Apps that provide personal loans, or have the primary purpose of facilitating access to personal loans (i.e., lead generators or facilitators), are prohibited from accessing sensitive data, such as photos and contacts.” Google announced.

The changes came as a result of a series of interactions between lenders, regulators, and borrowers in Kenya's loan app market aimed at addressing the industry's exploitative lending practices.

The number of complaints filed against predatory lending apps has risen in recent years due to their use of unethical recovery techniques, such as blackmailing borrowers with private images obtained from their phones, or harassing them by accessing and sending messages and threats to their contact list. Google's new policy could significantly curb predatory practices once effected.

Existing Requirements for digital lending apps in Kenya

According to Google's current guidelines, digital lending apps in Kenya must also adhere to the following conditions.

• Complete the Personal Loan App Declaration for Kenya, and provide the relevant documents to support your declaration.
• Digital Credit Providers (DCPs) should complete the DCP registration process and get a license from the Central Bank of Kenya (CBK). You must provide a copy of your CBK license with your declaration.
• If you are not directly involved in money lending activities and are just providing a platform to enable registered DCP(s) to lend money to users you must appropriately represent this in the declaration and produce a copy of the DCP license of your respective partner(s).

For the time being, Google only recognises declarations and licenses from organisations listed in the Directory of Digital Credit Providers on the CBK website.

Read Also: How CBK Regulation Affects Borrowers of Digital Loans

80% of NHIF Members Failed to Make their Monthly Contributions

Nearly 80% of National Hospital Insurance Fund (NHIF) members failed to make their monthly contributions, resulting in a loss of at least Ksh36 billion from the all-time high default rate.

All of defaulted members come from the informal sector.

According to a report by Kenbright Actuarial & Financial Services, only 1.6 million of the 8.1 million registered informal sector members contributed the requisite Ksh500 every month, leaving millions of Kenyans responsible for paying their own medical bills. 

Some Kenyans who contribute voluntarily to the fund have claimed that when it comes to financing costs, the NHIF prefers paying for civil servants over voluntary contributors. 

Registered members with overdue contributions are often barred from utilizing their insurance benefits to pay for medical expenditures.

Read Also: Family Health: Budgeting for Healthcare Costs in Kenya

Kenyans to Obtain Passports Within Three Weeks

Kenya is eager to make its own passport booklets domestically thanks to a public-private collaboration.

Julius Bitok, the Principal Secretary of Immigration and Citizen Services, made this declaration after receiving 100,000 additional new passport booklets following a two-month delay.

According to Immigration Department records, there are currently 63,265 passport applications pending issuance, the vast majority of which are the popular 34-page A-series passports.

The delay is caused by a lack of passport booklets and increased demand, primarily from Kenyans seeking to work abroad and students enrolling in international institutions.

PS Bitok stated that the government was in talks with potential partners to participate in local passport production in order to alleviate the issue and deliver faster and more affordable supplies.

"We’re in talks with investors for Public-Private Partnerships (PPT) so that we can manufacture and print these documents here in Kenya,” said the PS.

The applicants who have been waiting for Kenyan passports will finally receive them over the course of three weeks.