• June 19, 2024
  • Last Update June 19, 2024 6:55 PM
  • Nairobi

Mogo CEO tells MPs company lost Sh380 million in a year

Mogo CEO tells MPs company lost Sh380 million in a year

By Peter Ochieng

Mogo company lost over Sh380 million in operating costs and default rates, Members of Parliament (MPs) were told on Tuesday.

The company is widely known for providing affordable financing options for used cars, logbook loans, Boda Boda, and Tuk Tuk loans for Kenyans.

Appearing before the National Assembly departmental committee on finance and national planning on Tuesday, the company CEO Domas Mineikis in an attempt to defend the interest rates, attributed the high rate to the risk-based pricing methodology the company uses to determine the interest rates for each individual customer.

He told committee members that high operating costs and default rates saw the company lose Sh380,362,000 during the year ended on 31st December, 2023.

“This methodology takes into account multiple factors such as customer credit score, motorcycle model and market value, loan terms and the downpayment that the customer is contributing towards the purchase of the motorcycle,” he explained.

During the meeting, committee members Joseph Munyoro, David Mboni and John Ariko faulted the company for charging their customers exorbitant interest rates, after it emerged that the Interest rate for new motorcycle financing for most customers ranges from 1 percent to 2 percent per week, on a reducing balance.

“Hon. Chairman, this entity must be earning supernormal profits from charging such high interests. There is need to interrogate their financial statements to ascertain that they’re up to date with their tax obligations,” said Ariko.

The committee’s Vice Chairperson, Benjamin Langat directed that the company submits its audited financial statement for scrutiny by Friday this week.

He said the committee will develop a regulatory framework to harmonize the operations of asset financing entities.

While underscoring the need to protect the operators and other customers seeking credit facilities from such entities, he observed that many players had exploited the ignorance and helplessness of the operators, to make a kill from the unsuspecting clients.

“This committee has noted with concern that there is no regulatory framework guiding the operations of asset lenders. It is unfortunate that while those licensed by the Central Bank of Kenya to operate are charging interests at 20 percent, those operating under no regulations charge to the upwards of 100 percent or more. We need to harmonize the operations of all these firms,” he noted.

The Management of M-Kopa Martin King’ori (General Manager) and David Damberger (the Managing Director in charge of Mobility) also appeared before the committee, to enlighten the members about their operations.

MD Damberger told the committee that the entity is licensed by the Central Bank of Kenya under the Digital Credit Providers Regulations, 2022.

Members of the committee will wrap up the inquiry after meeting one more player, after which they will prepare a report for consideration by the House.

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