Can you imagine being blacklisted as a ‘dangerous’ borrower on the credit reference bureau (CRB) because you owe a lender 200 shillings and below?
What is more painful is that after being blacklisted on CRB for owing less than 200 shillings, you will have to pay 2,200 shillings to clear your name. Painful. Right?
It has now emerged that 500,000 Kenyans listed by various credit reference bureaus owe less than 200 shillings, further unearthing an extent some lenders are willing to go to destroy their borrowers’ credit future.
All the 500,000 Kenyans blacklisted for owing less than 200 shillings took their loans from mobile loan apps but either delayed or failed to pay back.
Kenya has over 500 digital lenders who issue micro-loans to Kenyans within a short period of time, mostly one month to be paid back with an interest.
Digital lenders in Kenya have been accused of charging high-interest rates at the expense of desperate Kenyans. The highest interest rate for a mobile loan in Kenya now stands at 35 percent with the shortest period of one to pay the loan being seven days.
The Central Bank through Governor Patrick Njoroge has termed digital lenders in Kenya as enhanced shylocks who use digital platforms to steal from their customers through exorbitant interest rates.
The government estimates that all the 500,000 listed on CRB for owing less than 200 shillings are youth between 18 to 24 years who borrow to gamble, lose and fail to pay back.
The government says 76 percent of Kenyan youth are gamblers who have taken up betting as a source of livelihood and not leisure.
There are calls for the Central Bank of Kenya to regulate digital lenders and shield Kenyans from the pain they are going through.
During the week, CBK issued a directive to commercial banks and microfinance institutions not to list a borrower on the CRB until one has failed to pay within 6 months after the maturity of the loan. The directive is to become effective in 3 months.