Verity Media Network

Violence, Language

MOBILE LOANS

The Modern Shylocks in Town

19 Aug, 2024
00 min 00 sec
Features Features
Violence, Language

Kenya's Central Bank (KCB) revealed that, as of November 2022, about 14 million accounts had been listed for defaulting on digital lending apps. Many borrow from one app to pay another, leading to a vicious cycle. KCB puts the loss to loan interests at approximately $1,200 per person each month. The digital loan services have bridged the gap for Kenyans who don’t have formal bank accounts or the low income earners that are not stable enough to borrow from formal financial institutions. The digital credits helps small enterprises to scale and manage the daily cash flow. It’s given, 35% of borrowing is for consumption, including house hold needs. This has caused many borrowers to become heavily indebted and struggle to repay their loans. Only 37% of borrowers use the money in businesses. They are often much expensive with their interest rates which can be as from 43% with also a fine on late payments, leading to a debt culture, borrowing from others to repay another accumulating bad debt. To avoid this, borrowers should understand the terms and conditions of the mobile loan they want to apply, for example, cost of the loan, transaction fees on failed loans and the interest charged.

MOBILE LOANS

The Modern Shylocks in Town

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Episode 1