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Economy In Focus: Why are People Increasingly Preferring Shylocks to Banks?

BY Juma · April 11, 2017 06:04 am

Who is a shylock? Shylock was a character in one of Shakespeare’s famous plays, The Merchant of Venice.  This character according to the play was a Jewish usurer who gave out loans to people at exorbitant interests. To say that a person is a shylock is to mean that the person is a loan shark. The term is also used to refer to a Mafia loan money collector. The term is not actually an English word but derived from a character in a book.

Kenya has more than 40 banks and has been said to be one of the markets that is overbanked given a large number of banks as compared to the number of potential customers. The banking sector in Kenya has in the recent months been through a wave of economic storm coupled with hard economic times as well as restrictions from their regulator.

Towards the end of the second quarter of 2016, commercial banks were seen as though taking advantage of their desperate customers to impose high interest rates on their loan products. This prompted the interest rate capping debate which passed all the stages in the National Assembly then made into law after the assent from the Head of State, Uhuru Kenyatta.

The interest rates capping law was seen by many as ‘the law of the people’ and people celebrated. The law was meant to ensure that Kenyans had an easy access to finances from financial institutions in terms of loans. But according to financial reports released by various banking institutions, the issuance of personal loans was halted as a result of the law as banks refrained from giving out loans to individuals.

It is now becoming increasingly worrying that Kenyans are now preferring shylocks to banks in terms of accessing loans. This came to the surface after a man was arrested with hundreds of ATM cards in Buru Buru with a list of PINs. It was later discovered that the man was a Shylock and that his customers had left him their ATM cards with their PINs so that he could pay himself to recover the loans given to them by him. This information is as highlighted to blogger Robert Alai’s Facebook Page

PIN

The question is, why are Kenyans shifting towards shylocks to the extent of trusting them with their ATM Cards? Why can’t they get loans from their respective banks? Here are some possible reasons why Kenyans are embracing shylocks:

  1. Banks have greatly minimized in giving out personal loans especially after the interest capping law leaving their customers with nowhere to run.
  2. To find a personal loan from a bank involves a long process that scares away many customers.
  3. Shylocks give out instant loans as compared to banks hence reliable during ‘emergencies’.

Why do you think Kenyans are running away from the banks to the Shylocks?

Juma is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it. (020) 528 0222 or Email: info@sokodirectory.com

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