The Parliamentary Committee on Finance and National Planning has intensified its investigation into alleged exploitative practices by loan firms targeting boda boda operators.

This inquiry which followed a petition by Kigumo lawmaker Joseph Munyoro, brought JoyInc Creditors and Progressive Credit under scrutiny for their dealings with motorcycle owners. 

The meeting was part of an ongoing probe targeting five loan firms, following complains by boda boda operators over exorbitant charges, theft and unfair repossession practices.

During the intense grilling session, Members of the Committee probed the lending companies on various aspects, particularly focusing on the allegations raised by boda boda operators.

Managers from the companies were at pain to explain their approach, highlighting a social enterprise model where operators purchase motorcycles through long-term payment plans due to their limited disposable income.

“The officials told the MPs that since most boda-boda riders have low disposable income, they had devised a social enterprise whereby the operators buy the motorcycles under a long-term payment period,” read the statement by the committee.

Also Read: Loan Firms on the Spot Over Theft, Repossession of Boda Boda

However, the Committee was not satisfied with their responses and raised questions regarding the recovery processes in case of defaults, grace periods for defaulters, data protection measures, and the effectiveness of tracking gadgets installed on the motorcycles.

Recovery of stolen motorcycle’s 

The Committee Chairperson, Kimani Kuria emphasized the need for professionalism and adherence to the law in their operations.

He pointed out the discrepancy between the recovery of stolen motorcycles compared to default cases, urging the lending companies to run their business in a more transparent manner.

“During the public hearings, some boda boda operators told us that once motorcycles are stolen, they are barely recovered, why is that? Is it that your tracking systems are faulty?” Kimani posed.

The representatives of Progressive Credit tried to clarify their operations, mentioning their adherence to regulations set by the lenders’ association AMFI, and provided insights into their default rates and measures for motorcycle maintenance.

They noted that their default rate is currently at 45 per cent while cases of stolen motorcycles stand at 2 per cent.

“They further held that their program is customer friendly. They also explained that the Insurance offered to the operators is third party, adding that they run an internal kitty to assist with the motorcycles’ maintenance.”

However, their explanations failed to convince the Committee, leading to a request for a follow-up appearance.

NTSA and the IRA are Questioned

In a bid to address the issue comprehensively, the Committee also engaged with the National Transport and Safety Authority (NTSA) and the Insurance Regulatory Authority (IRA).

Aden Millah from the NTSA acknowledged the challenges faced by boda boda operators due to high interest rates and promised to monitor and inspect the sector to address safety concerns.

The discussions also touched on motorcycle registration, vehicle transfers, and the legal framework for asset repossession in cases of default.

Also Read: KCB Announces 30 Jobs, Clarifies Recruitment Advert of 58,000 Boda Boda Operators

Kalai Musee from IRA emphasized the insurance regime governing financed commercial motorcycles, detailing the coverage provided under the Motor Commercial Class of business.

The Authority was urged to collaborate with insurance companies to ensure compensation for victims.

At the same time, legislators called on the Authority to follow up with respective insurance companies to ensure compensation is offered to the victims.

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