This archive report was first published on 6 November 2019.
President Uhuru Kenyatta's government has launched a new mobile loan product called Stawi, aimed at small and medium-sized enterprises (SMEs). However, economist David Ndii has raised concerns that the scheme is a ploy by the Kenyatta family to take over lending to SMEs, exploiting Kenyans through predatory pricing.
According to Ndii, the Stawi product was originally created in February as 'Wezesha', which was designed to ride on Huduma Namba data to profile borrowers and use the integrated network of Huduma Centres for marketing and registration purposes.
Ndii claims that the only change made was to rename the scheme from Wezesha to Stawi, but the underlying strategy remains the same. He argues that the product is a strategy to finance undercutting the competition by pricing below cost at entry, with the intention of charging monopoly prices once the competition is driven out of business.
The Stawi product will be managed by NCBA, Co-operative Bank, Diamond Trust Bank (DTB), and KCB, with the Kenya Commercial Bank and Cooperative Bank under the leadership of the Kenyatta Family-owned Commercial Bank of Africa.
Ndii questions why the government is using public funds and resources to subsidise and market a credit product meant to exploit Kenyans. He also asks why the Stawi product will give undue competition to other products in the market.
However, the Kenya Bankers Association (KBA) chairman Joshua Oigara defends the Stawi product, stating that it is the lowest cost mobile loan for SMEs, making it instrumental in making credit accessible to millions of business owners and youth entrepreneurs across the country.
Ndii argues that the 9% interest rate offered by Stawi is bait, designed to make the case for the proposed government credit insurance scheme by purporting to offer SMEs affordable credit.
