How mobile loan platforms have lured Kenyans into debt trap
Tuesday, April 3, 2018
By Patrick Olushula and Dominic Omondi
Recent events that have seen the Government borrow to offset maturing loans have raised a storm among Kenyans.
Yet, bombarded with numerous digital credit providers, Kenyans have dug themselves into a refinancing crisis that might be uglier than that of their Government.
Unlike the Government that has insisted most of the borrowed cash has been spent on projects such as construction of roads and hospitals, most Kenyans who have rushed to the digital platforms have splurged the money on their day-to-day needs, sometimes on alcohol and other forms of entertainment.
The allure of using mobile phones as a tool for financial services is laying debt traps for many borrowers, with most stuck in a vicious cycle of borrowing from one digital credit provider to pay another.
Just as a sluggish economy in which exports have underperformed has forced Kenya to arrange for another credit to settle a loan that was maturing, tough economic times such as poor business performance, lay-offs, or delayed salary have seen digital borrowers struggle to repay their loans.
Source: The Standard Digital (link opens in a new window)
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