This archive report was first published on 12 October 2019.
Published on October 12, 2019, by MAGESHA NGWIRI, a renowned author at the Nation.
With the advent of digital revolution, borrowing money has become easier than ever. Commercial banks, in collaboration with mobile network operators, especially Safaricom on its M-Pesa platform, offer instant loans to almost everyone who owns a smartphone.
These loans are convenient, with no need for collateral, guarantors, or paperwork. However, their convenience comes with a price. Many borrowers spend the money on consumer goods instead of generating more income, leading to a vicious cycle of dependency.
As a result, the proliferation of unregulated players with shylock-like tendencies has made all the platforms suspect. The Central Bank is uneasy about digital loans that are sinking many borrowers into penury.
Despite the challenges, digital loans have become a fact of life in Kenya. The best thing the regulator can do is to find ways to standardise interest rates and weed out those outfits whose only interest is to feed on the miseries of imprudent borrowers.
