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M-Shwari fees are legal, court rules in Cofek case

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Justice Fred Ochieng on Tuesday however ruled that the consumers lobby had failed to prove that indeed M-Shwari charges an interest on its short-term loans. FILE PHOTO | NMG

M-Shwari charges are legal, the High Court has declared in a ruling against the Consumer Federation of Kenya (Cofek).

Cofek had sued the Central Bank of Kenya and Commercial Bank of Africa (CBA) terming the M-Shwari fees on mobile phone loans as interest charges that breached the legally imposed cap on cost of credit.

Justice Fred Ochieng on Tuesday however ruled that the consumers lobby had failed to prove that indeed M-Shwari charges an interest on its short-term loans.

Cofek moved to court in 2016 claiming that the charges on M-Shwari loans were not a facilitation fee as claimed by CBA.

“In this case, the petitioner proceeded to give submissions on the basis of assumptions, rather than on the basis of proven facts. As the facts were disputed, it was shaky foundation upon which the petitioner made submissions,” said justice Ochieng.

The Judge further observed that CBK had adhered to the law by considering and approving the M-Shwari product, noting that there were no evidence of collusion between CBK and CBA as alleged by Cofek.

Justice Ochieng cleared CBA of the allegations of unfair business practices and false representation.