Convenience versus cost of mobile apps borrowing
6 April 2018
Kenyans have never had it so good when it comes to sources of funds. With some personal self-discipline, Kenyans can finally live a life largely unencumbered by overwhelming debt and make ends meet in a dignified and transparent manner. But caution is advised. Mindless borrowing has seen many listed by the Credit Reference Bureau and captive of irredeemable debt.
Millions of Kenyans are wallowing in debt from mobile borrowing according to a survey conducted by Financial Service Deepening (FSD Kenya).
Most of the mobile app lenders charge interest rates above the 14 per cent rate approved by the Central Bank of Kenya. The cycle of borrowing and paying at rather high rates is repeated month after month, throughout the year, which can become chronic.
While "pesa mkononi" and such other mobile apps are celebrated solutions to challenges facing enterprise, it is also true that they are expensive. Which is why mobile borrowing should be regulated so that the interest rates charged are not extortionate or brutal, as used to be the case with the micro-finance sector not long ago.
According to the KNBS, there are 17.9 million employed Kenyans against 25 million of working-age (15 to 64yrs). Six million of them regularly borrow money from mobile apps offered by the big banks and other financial sector players, including giant telco firm Safaricom.
Source: The Star