NAIROBI (Xinhua) --
Some four months ago, Nairobi resident Joash
Mutisya was in a financial crisis as he wanted to travel to his
rural area to attend to an urgent matter but he had no money.
After unsuccessfully trying to borrow from his two friends,
Mutisya turned to a mobile money app, where he borrowed 50 U.S.
dollars, thanks to his frequent use of Mpesa, a mobile cash
The money was 10 dollars more than what he needed and he was
supposed to repay in a month with 10 percent interest.
But to date, Mutisya has not repaid the money and he has also
borrowed from two other providers of the service without
"I will repay when I get money. It is only that money has
become hard to come by because business is bad," Mutisya, who
runs an accounts consultancy in Nairobi, told Xinhua recently.
His predicament mirrors that of hundreds of other Kenyans,
who have borrowed from the dozens of mobile loan platforms in
the country and failed to repay.
The citizens are living in debt after borrowing from the
platforms that have made it easy to access loans.
There are some 50 mobile lending apps in Kenya, some run by
banks and others are independent entities, and new entrants are
still coming on board.
A majority of the platforms offer loans at a one-off rate of
between seven percent and 14 percent.
They are popular among Kenyans because they readily dispense
cash and one does not need collateral to borrow.
Banks have entered the business because the service operates
outside the Central Bank interest rate capping of 4 percent
above the current benchmark rate of 9 percent per annum.
"I have several loans, two dating back 10 months ago and as
things stand, I may not repay them," said university student
She has received several reminders to repay the loans but
However, as she prepares to graduate this December, the
commerce student fears that she may not get a job due to the
"Two of the apps have informed me that my name was forwarded
to the credit reference bureau (CRB) for blacklisting," she
To get a job especially in government or even apply for
electricity or water connection, one needs a CRB certificate to
show that they do not owe any loans or institution.
"I don’t know what I will do when that time comes, which can
even be in five years since jobs are hard to come by and by that
time, the loan would even have doubled because of the interest
rate," she said.
Ernest Manuyo, a lecturer at Pioneer Institute in Nairobi,
noted that a good number of those borrowing cash through the
apps are low income earners or have no steady income like
students or the unemployed. They cannot get loans from formal
"The chances of them repaying especially if they have
multiple loans is slim.
"This leaves them indebted," he said.
Sadly, a good number of the people take the loans for
non-core reasons that include betting or buying alcohol.
"These apps are creating a society of people living in small
"And the implications are huge for people like those looking
for jobs at the national and county government," he said.
He noted that defaulting the loans is easier because of their
"There is no one to remind you to pay the loan physically.
"There are no threats of auction.
"The lack of push as it happens with banks make many people
fail to pay," he said.
As at June, there were 500,000 people blacklisted with CRBs
for as little as 5 dollars loan, up from 150,000 three years
ago, with the number rising with the many apps providing loans.
Once blacklisted, one may not access a loan for up to seven