The Mess in Borrowing Digital Loans in Kenya

By

The festive mood is everywhere in the atmosphere. And immediately after the season, there comes the reopening of learning institutions in Kenya. The COVID-19 pandemic came with its disruptions to the economy. It has led to a shrink in employment opportunities and closure of business.

But at the same time, there are sectors that continue to thrive and even got a boost as more people shift to online opportunities. Thanks to the internet, several businesses are quick to embrace a change and moved to the online scene amidst social distancing and hindrances in travelling.

Additionally, more people are realizing that indeed the internet holds the future. Many institutions have come to learn the fact, holding most of their meeting virtually. That is how 2020 has been a good year for Zoom, Skype etc.

With the increases in internet accessibility in Kenya, in addition to smartphone penetration, lenders saw the opportunity in mobile lending. That is getting a loan at the comfort of your hand. A decade or two ago, it could only be possible by stepping the floor of a bank. 

Digital lending came in to facilitate lending but unfortunately came with multiple drawbacks. That has led to an alarm by the Governor to the Central Bank of Kenya.

Recently, Dr. Patrick Njoroge was addressing the Parliament where he revealed that the regulator is keen to cushion Kenyans against unjust lending practices especially towards the festive season and schools resumption. 

It comes at a time when there is a proposed regulation which after adoption will see the digital lending providers operate under the scrutiny of the regulator. But what could be the reason behind proposing the law on this relatively new service. Below are the downsides of digital loans.

Exploitative interest rates

There is high likelihood that you ever found yourself borrowing through a certain app. in fact, may be you have that loan already and even worse a defaulter. Well, did you realize the interest rate of that Ksh 1000 you borrowed? Someone may be of the opinion that the loan was critical at that moment thus they don’t mind the charges.

It is unfortunate taking a 30-day loan on an interest of 15% and around 10% for a 21-day loan. It means that if you borrow Ksh 100,000 for a month, you will pay Ksh 115,000. Don’t imagine that it is easy to make Ksh 15,000 from Ksh 100,000 only to give it away. Remember that you are responsible for the facilitation fees. If the bill successfully goes through the National Assembly, the CBK will be in a position to regulate the exploitative high interest rates. 


Default and everyone gets to know it

It is wrong to default a loan and no one can encourage that. If you borrow a loan, you have to be ready to pay back. However, make a small mistake and default a loan from some of the digital lenders. 

First, you are in for a series of reminders. Of course, you owe someone and there is the need that they make you aware lest you forget. Besides, they comb up your contacts and might follow up on you through your friends and family. Unfortunate to you and luck on their side, they could end-up finding the contact to your boss. Just imagine!

Cycle of debts

Do you think that you can get out of this cookiejar? The high interest rates won’t let you off the hook that easily. You find yourself back, immediately after paying the previous debts. If there is any increase in the borrowing limit, you are an exception if you don’t get tempted to re-borrow.  If not so, you are on Playstore looking for yet another loan app. 


Mobile loans have been a problem especially amongst the youth in Kenya. It is among the reasons pushing for regulations seeking to control the lending services. But did you know there are online opportunities that could get you out of the loan menace. 

 

 

 

 

 

Fred Kabiru

Fred Kabiru is a content creator and SEO specialist. He is passionate and experienced about Business, Digital Marketing, News and Technology. He is a believer of content worth reading for a brand worth following.

 

 

Comments

Post a Comment

Popular posts from this blog

Make Money Online Today (Step By Step Guide)

By
Image
Gone are the days when you had to open a storefront to start earning. The internet has changed the game. Today, you can do business in a remote location: no shop, no stocks. Interesting? Well, you don’t have to own the products. All you need is to have that client and come up with how the commodities reach them. Additionally, the internet has opened up a lot of income-earning opportunities. From your couch, it is possible to see your money grow. Such is the case when you join First and Fast Communication System Company (FNFCOM). How does it work? Well, fnfcom is an online airtime distribution system enabling you to have sufficient top-up. Besides, the company seeks to help you out of those mobile debts, the likes of Fuliza, Mshwari, etc. It is time to get out of the cycle of debts. So, how do you go about it? Sign Up at fnfcom The first step is to create an account at fnfcom.   Go to your browser and load the website www.fnfcom.com . It takes you directly to the   ...
Read more

4 SECRET TECHNIQUES TO MAKE YOUR BUSINESS MORE AUTHENTIC

By
Image
 The Untold Secret to Mastering Authenticity. There's something to be said about authenticity in business . It allows us to show up as ourselves, not the cardboard cutouts we think others want to do business with. The result? A much more enriching and personable work experience and an irresistible magnetism that attracts new business. Authentic people and things are the real deal. And when it comes to business, this matters more than you may think. Take a look at the following techniques to build and maintain authenticity in business. #1. Use storytelling Authentic people and things have stories behind them. These stories back up claims and highlights how they got to where they are today. An authentic meal? Passed down from generation to generation. An authentic artifact? Found through an excavation in some part of the world. An authentic business? Started in the basement of a factory, built up through years of struggle, determination and grit. You need to be a storyteller. A...
Read more

TOP 5 REASONS WHY YOUR BRAND NEEDS LOYALTY PROGRAMS

By
Image
 The Hidden Secret To Brand Awareness. As brands constantly invent new ways to engage with their audience, customers are concurring with new technology faster and faster. They expect a higher form of a relationship with their brands. To succeed, you need to create an engaging customer experience. A well-designed and well-executed loyalty programme c an help you retain existing customers, attract new customers, reduce turnover and drive profits. Customer loyalty should be easy. And, by combining the ability for customers to pay for goods and reap the rewards via the same marketing channel, it really is easy. There are 5 primary reasons why your business should have a loyalty program:- #1. Grows your business through referrals The first stage of operating a successful business is chasing and maintaining customers. Without them giving you their money, your business ceases to exist. The second stage is one that, sadly, many businesses never get to getting current customers to bring in...
Read more

5 INCREDIBLY USEFUL TIPS FOR NAMING YOUR START UP.

By
Image
 Tips For Small Businesses. Entrepreneurs fret over packaging and host of other details as they started, and then leave one of the most important aspects as an afterthought. The sad truth is that the right name can sometimes make all the difference when it comes to propelling a business to success , rather than just slogging on. The wrong name can do worse than fail to connect with customers. It can also result in insurmountable business and legal hurdles. In contrast, a clear, powerful name can be extremely helpful in your marketing and branding efforts. Whether you are a new small business owner or you're trying to launch the next big tech startup, these tips can help you choose the perfect name for your company. #1. Keep it simple, short and scalable This is one of the best tips that you can follow to name your company. You should choose a name that is simple, short, scalable and memorable. Another common mistake that startup owners make is to choose names that are too restrict...
Read more