Lending digital money via mobile phones is a time bomb that is plunging many young people across the country into depression.
So easily accessible and addicting, just last year, sources said Kenyans borrowed nearly 1.2 billion shillings per day in mobile loans, signaling a growing reliance on debt that increased with the impact. negative of Covid-19 on the economy.
Speaking to KNA, some young people in Murang’a revealed that they had been listed by the Credit Reference Bureau (CRB) for failing to repay loans on time.
Thanks to mobile banking, a smart phone owner can borrow between 500 shillings and 70,000 shillings without the hassle, all you need to do is be tech-savvy.
Recent studies place young people at the center of this web of borrowing because they mainly want immediate gratification.
They want it here and now, and a smartphone is convenient, but not without dire consequences.
Anastacia Njoki, 21 and a third-year university student, admits to having four mobile money lending apps on her smartphone.
“From one of them, I started with a loan limit of 500 shillings, which increased to 4,500 shillings. Cumulatively, I currently have the different Sh 7,000 mobile money apps. Sometimes I end up with a loan of over 20,000 shillings that I have no idea how to pay them off, ” Njoki said.
According to a 2018 digital credit survey, at least 50 mobile phone lending apps are currently operating in Kenya. The industry is largely unregulated but includes major financial players.
The majority of young people borrow on impulse since loans are readily available.
“Once I walked past a shop and saw dresses that I liked and since I had no money I borrowed from one of the mobile apps and bought several dresses” said Njoki
She admits that the administrators of those apps kept calling her to pay off her loans, forcing her to delete the apps in order to escape incessant calls and texts.
Therefore, this saw Njoki listed in the CRB, meaning she cannot access loans now or in the future unless she exits the registration desk first.
Many young borrowers are struggling to repay their loans. According to a survey by Micro-Save, a financial services consultancy, 2.7 million borrowers have been negatively listed by CRB in the past three years, of which 15% for amounts below Sh. 200
For some young people, their pending loans extend for five years or more. At 38, Justus Mwangi took out a quick loan in 2016 while in college as he had to throw a birthday party for his then-girlfriend.
“I borrowed 1,500 shillings from one of the mobile loan apps, threw a party, but couldn’t repay. The administrators made several calls, texts and emails asking me to pay. I promised to repay once I have a stable job, ”he said.
Mwangi was listed on CRB after four years of being harassed to pay. To this day, he is still listed and cannot access any loans.
However, a few have used the proceeds of the loans to start businesses and develop their entrepreneurial skills.
Joseph Kiarie, 24, a fourth-year university student, borrowed 30,000 shillings which he used to set up a movie theater and PlayStation store in Kandara.
“I increased my loan limit by paying back on time and on time I was able to borrow more money which allowed me to open another branch in Kitui,” Kiarie said.
By paying off the loans and borrowing more, his PlayStation and cyber tech movie store has managed to open branches in Kitui, Kwa Vonza, Nairobi and Kandara under the leadership of Kiarie.
He admits, however, that he was also listed on CRB because he failed to repay an application loan in 2020 as his business was hit hard by the Covid-19 pandemic.
“When the economy stabilizes, I will repay my loan in order to continue to develop my businesses,” he added.
Being registered with CRB came as a blessing in disguise for 35-year-old journalist Johnson Kariuki.
Kariuki had six loan applications on her phone and had increased her credit with one application from 500 shillings to 15,000 shillings.
“I would borrow and repay individually. I was addicted to an endless cycle. I haven’t done anything successful with the money. In 2019, the incessant calls from lenders left me in a state of depression. I couldn’t pay and was blacklisted. I had to change lines and use a small phone. It was a relief because other lenders couldn’t lend me money, ”he adds.
Kariuki said being blacklisted helped him avoid taking out loans most of the time as he was indifferent to when to clear his loans and get a positive list.
By Florence Kinyua and Bernard Munyao