Why MPs are targeting boda boda loan sharks

Kenya's lawmakers are striving to curb the practices of loan sharks operating in the boda boda industry, which is a two-wheeled motorcycle taxi service. MPs are advocating for the implementation of the in duplum rule, a legal principle that limits the interest charged on a loan to the original amount borrowed. This rule aims to shield borrowers from being overwhelmed by accumulating interest.

The push for the in duplum rule came after Kenya Bodaboda Riders and Owners Association National Executive Chairperson Charles Gichira filed a petition to the House. Gichira accused lenders of charging excessive interest rates, providing insufficient loan terms disclosures, and employing aggressive debt-recovery methods. The petition also highlighted instances where borrowers had repaid more than the value of their motorcycles, yet did not receive ownership of the assets, and where stolen motorcycles equipped with tracking devices were not recovered.

Additionally, borrowers faced repayment demands even after insurance companies compensated lenders for stolen or damaged assets, leading to some receiving adverse credit listings. Gichira's complaint to Parliament cited Mogo Auto Limited as one of the firms in violation of fair lending and asset-financing practices. The House's Justice and Legal Affairs Committee Chairman, George Murugara, emphasized the committee's commitment to ensuring the in duplum rule is enforced to punish those charging excessive interest rates on boda boda loans.

Murugara stated that the contracts between lending firms and boda boda riders lack legal basis, making it impossible to sustain a case in court. Majority Leader Kimani Ichung'wah called for the firm's exploitation of boda boda riders to be stamped out, regulated, and deregistered if they operate outside the law. This issue is not new, as the House previously addressed similar concerns in 2024, when five firms accused of exploiting boda boda riders presented a petition to the Finance and National Planning Committee.

The boda boda association revealed that they were never provided with logbooks of the motorcycles they owned, even after completing the loan, and were charged high fees for breakdown, storage, and interest on defaulted payments.