New Year Resolution: Goodbye Lending Apps

by Enock Bett · Published December 27, 2019 · Updated December 27, 2019

It’s almost that first day of the year and everyone is preparing a list of New Year Resolutions to hit in the year 2020. I haven’t been good at keeping this, every New Year, by the time the third month approaches, I’m usually in my own world unable to account for any single goal I set at the beginning of the year. This coming year, I’m targeting to quit the lending apps for good. That is the only resolution I promise to keep.

We’ve witnessed the tremendous growth of the digital lending apps in Kenya in the last 10 years thanks to the penetration of smartphones and internet usage among Kenyans. Jumia report 2019 indicates that there is a 91% (46.94M) mobile subscription and 84% internet connectivity penetration in Kenya. This means 43M of the total population in Kenya, have access to the internet.

The smartphone mobile penetration has contributed to the flourishment of various mobile lending apps. Timiza, Branch, Tala, Nivushe, KCB Mshwari and Zenga app are just some of them. These lending services have led to the rapid development of financial technology in Kenya, Fintech. Safaricom’s MPESA will not go unmentioned when we talk about mobile lending applications as it has become an easy avenue for all these companies to reach their consumers by dispersing the loans to their MPESA accounts for as short as 5 minutes after receiving and approving their requests for a loan.

Kenyan youth and even the employed whose income cannot sustain them or secure enough to convince the banks to issue them loans have resorted to using the digital lending apps. According to a report by FSD Kenya, the majority of people who borrow these loans use the money to meet their daily household expenses like food, others; transport, and medical emergencies.

Read: Safaricom hustlers get Barclays Timiza App for unsecured loans

But does it offer any solution in as far as progressing economically is concerned? I know how handy it comes when one is in need, starving or going through some hard financial situations, being one of the sincere subscribers, I can confirm, the size of the loans you will be given by these apps will depend on a number of things such as your daily MPESA transactions, and obviously, for the unemployed youth who don’t do regular transactions, the amount dispersed to them will range between 500Kes to 8,000Kes, which may not be enough to start any big business that will profit them.

So what happens, you will use the money to do your own stuff and may not be able to refund at the end of the loan duration unless you borrow somewhere or toggle between the other apps to repay the pending ones, or even sometimes borrow from all of them and end up in a crisis, unable to pay back. Taking new loans to repay existing debts is the biggest financial mistake one can make. If you are not sure of repaying the money, just don’t borrow no matter how easy you can access the credit. Microsave Consultancy firm reports that more than 2.7 million Kenyans have been blacklisted by credit reference bureaus for failing to pay existing mobile loans.

This Fintech slavery is what I intend to cut myself completely from. I have paid all the pending loans, deleted my accounts, and uninstalled all the lending apps on my phone. This way, I am sure of how to plan and solve my financial problems without being in debt in the new year.

This meme here illustrates what the lending apps do to the Kenyan youth. Happy New Year in advance!