Google’s personal loans policy could hurt financial inclusion gains in Nigeria and Kenya 

“It will make it more difficult for lenders to carry out KYC because customers are familiar with uploading photos when asked for KYC documents. Lenders who cannot find alternative but equally efficient methods of getting KYC may potentially see a reduction in their customer acquisition rate. On the loan recipient side, this might mean that fewer people will be able to access loans on Android phones except such customers are quickly able to adapt with whatever alternative methods the lenders design.”

In Nigeria, 78.75% of Nigerians use smartphones that run on the Android operating system. That number is higher in Kenya at 89.88%.

However, beyond affecting the operations of fintech startups, Google’s increasing role as a de facto regulator poses challenges for African startups. Reacting to the development, Ngozi Dozie, founder and CEO of digital lending pioneer, Carbon points out that startups depending on Google’s Play Store could be adversely affected when policies do not go their way.

“Google is going to make decisions that optimise for its largest markets thus the attention of the vast majority of its staff and consequently policies will be on these markets. Startups in non-core emerging markets have a heightened risk of over-dependence on this channel, especially when policies may be detrimental to their growth.”

Akin-Moses echoes the same thoughts when he says, “As much as Google has helped with the development of services in Africa generally, there are certainly drawbacks in their increased dominance on the African landscape.

“A major draw is that as a private company (owned by Alphabet), it will most likely act in the best interest of its business and key stakeholders before other considerations. How much of that “interest” aligns in favour with the African digital lending space is anybody’s guess.”

While Google’s policy could negatively affect both startups and the individuals they hope to protect, its concerns regarding predatory lending are valid. However, there are more effective ways of ensuring borrowers are protected. For example, its policy requiring lenders to show proof of regulatory compliance means only startups approved by the regulator in these countries can be on the Play Store and is a step in the right direction. It can also work with regulators to create guidelines for lenders that are yet to get a licence. That way, all honest lenders can continue to provide their services pending the receipt of a licence.