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Alarm as easy digital loans yoke more Kenyans to debt
Author: Patrick Alushula, Business Daily (Kenya), Published on: 16 May 2019
"Alarm as easy digital loans yoke more Kenyans to debt"
If truly what comes easy won’t last, as the old saying goes, then most Kenyans may be having second thoughts on the country’s rapidly rising access to financial services driven by mobile technology. Although the proportion of Kenya’s population with access to formal financial services hit 83 percent in 2018, according to a survey part-conducted by the Central Bank of Kenya (CBK) and the National Treasury, many borrowers are fast reporting the downsides of quick and easily accessible money. “Could this financial inclusion be driven by some kind of laxity that doesn’t quite check on regulations or could we be talking of unhealthy financial inclusion that cannot drive growth?” Joy Kiiru, a lecturer at the University of Nairobi’s School of Economics posed during the launch of the 2019 Financial Access (FinAccess) Household survey report.
Borrowers are finding themselves locked in debt or losses due to lack of financial literacy on key aspects such as cost of borrowing. There is also lack of consumer protection which leaves many vulnerable to fraud, unfair product pricing among other malpractices. “The survey results showed that the proportion of respondents relying on their own knowledge was 39.6 percent compared to 34.7 percent who relied on family and friends for financial advice” the FinAccess survey report said.