Mobile Loan Lending Apps are here with us; now devouring Kenyan youth with reckless disregard of their hopeless lives.
An unpopular research indicates that at least one in five youths has a mobile loan app on their phones. Majority have about five Apps: Tala, Zenka, Okash, Ipesa, Branch, Timiza, name them… This is not because they love keeping them but due to how easy it is to obtain money (loans) with them.
Picture yourself broke with a smart phone and internet access. One minute on your phone, the second on Google app store, download a mobile loan app and in ten minutes time you have 1000 shillings in your M-Pesa. What a relief! What follows is you working hard to repay the loan as chances of your limit being raised depends on how fast you repay, with interest. The second time you apply and get Sh 2500.
On the basis that they were not tax compliant, the government of Kenya halted the operation of 19 betting companies, 13 casinos and six lotteries in 2019. Among the casualties were two major companies: Sportpesa and Betin. In so doing, according to government officials, youths would consequently turn to real work and not the betting craze. The companies had to quit the Kenyan market. No doubt, many citizens breathed a sigh of relief. The ogre that was swallowing Kenya’s young had been thrown out of the window.
However, nobody saw another giant that had been lurking about, again, thanks to Kenyas dwindling economy and joblessness. Maybe it was too young to an extent that we kept it as a pet. Sadly, a giant is just a giant.
Kevin (not his real name), a resident of Kibra slums is currently being chewed by the jaws of the giant. He confused the giant for a pet. After going on a loaning spree, he could not settle a loan of Sh5000 shillings on time. And so, the penalties have accumulated to Sh13000. It’s sad that Kevin can do less to get off the giants jaws. He is not in any hurry.
“The last time they called me, one of the customer care agents told me, ‘aki Kevin wewe tumekuachia mungu tu’ (we leave it for God to handle your case)”.
Kevin , a 3rd year Communications student in a renowned university in Kenya is bitter how the amount has doubled up to that figure.
In the financial year 2018/2019, the Central Bank of Kenya (CBK) figures indicated that there were over 30 million customers and 787.8 million transactions valued at KSh2.1 made through mobile loan apps. The transactions were made through Safaricom (Mpesa), Airtel (Airtel Money), Finserve Africa Ltd (Equitel), Mobile Pay Ltd (Tangaza) and Telkom (T-Kash). CBK, apologetically affirmed that there was no close monitoring of this apps that are now exploiting their customers. CBK Governor Dr Patrick Njoroge described some of these mobile apps as predatory, likening them to shylocks over the high-interest rates they charge. Currently, it is not clear who between the CBK and Communication Authority of Kenya has the oversight role over mobile loan apps in Kenya.
You see, being broke is normal, but it becomes abnormal when the lenders exploit customers after noticing the gaps within the laws. How do you even explain this? Felix Otieno, a resident of Donhom, Nairobi owes a certain mobile lender approximately Sh43, 000.
It all started by taking a loan of 5000 in January 2019. He failed to pay in time, and so the penalties started being imposed. Struggled to pay whatever he found, daily, weekly, monthly and boom! He gave up upon realizing the figure had jumped to Sh9000. He stopped and up to ‘lipa mdogo mdogo’ and to date, his name is still listed with the Credit Reference Bureau (CRB).
A recent report by CRB indicates that more than 2.7 million Kenyans have been blacklisted for defaulting on their loans. Most of them being culprits of mobile lending apps. Google issued a red alert on Android apps that offer short-term loans, saying it wanted to protect consumers from what it called “deceptive and exploitative” terms. To date, nothing has changed.
Steven Okiya, a finance expert, notes that majority of consumers are not bothered to go through the conditions set by the companies as most are desperate. This has led to most lenders taking advantage of the situation.
Meanwhile, if Mathare MP Anthony Oluoch’s petition is anything to bank on, then consumers will have the last laugh. The MP, wants parliament to probe mobile money lenders claiming that some were exploitative. Mr Oluoch said that due to lack of proper regulation, mobile money lenders infringe on clients’ right to privacy by accessing customers’ contacts to call friends and family about the borrowers’ debt status.
Perhaps the existing gaps have led to these companies to stop following up loan defaulters? Since Last year, neither Kevin nor Felix has been called. But wait, is the silence of the lender a blessing or a curse?