Mobile lending is the future of credit access if self-regulation is achieved

As my father used to say: “There are two sure ways to lose a friend, one is to borrow, the other to lend.”

Money is an emotive issue and few of us understand how truly money works. It’s the catalyst that defines our character and the Achilles heel of mankind. Money is grown through investments, through creative legal means. It’s called currency because money must circulate to be of purpose and value to the current owner.

Failure to ensure the circulation of the money leads to the growth of poverty. Borrowing money is one way to access the cash to you or oneself for whatever reason the money has been borrowed.

Borrowing is an ancient grid point to the circulation of capital in any given economy. When it comes to personal finance, borrowing in a key ingredient to one’s growth and how one manages this, will define a lot about their financial health.

Borrowing is both positive and negative depending on the reasons as to why one would want to borrow because it creates a debt into your financial health system and this can only be remedied to normalcy if the reasons for borrowing the money are followed through and the money paid back. This is where the challenges arise and one’s character is put to the test of financial prudence which ultimately affects one’s overall character.

Applying for a loan requires a lot of research—not just on loan specifics, but research on you too. Understand how you react around money. Money that is yours. Money that is not yours. Loans make some of our biggest life decisions possible, so it’s crucial to be realistic about your goals, your financial situation, and your future.

I took it upon myself to indulge in the medium lifestyle of an average Nairobian as far as loans are concerned to be able to enable me to make an informed substantive opinion on matters loans.

Debts are nowadays like children begot with pleasure, but brought forth in pain. Debt is like any other trap, easy enough to get into, but hard enough to get out of. Before the birth of mobile lending, the traditional mode of borrowing was a painful ecosystem. Mobile lending was God sent as it has made access to credit easier and more convenient.

Kenya is said to have at least 500 mobile lenders who issue loans to Kenyans via mobile loan apps. The lenders have for many years been enjoying an unregulated atmosphere leaving them to set their interest rates. This is where the crux of the matter is. Kenyans are crying out, saying they are being taken advantage of. I am forced to ask, this is not a moral issue, and it’s a legal transaction matter, where does morality come in? Its willing buyer, willing seller…where does the issue of being taken advantage of come from?

Millions of Kenyans opted for mobile loan apps after most financial institutions kept off from lending to individuals and SMEs as they were considered risky borrowers. Not to mention, the other available option was to go to shylocks and this is akin to visiting the devil and asking for help. This is why mobile lending has blossomed so much because it’s taken up a need that established and well-regulated institutions have failed to heed. To some point I am asking, who is pushing the conversation behind the name-calling for mobile lending, is it the public or the regulated financial institutions?

The issue of collateral when it comes to loans has been the bane of the conversation and this is something that mobile lending has been able to sort and take advantage of the Credit Reference Bureau to analyze and study one’s credit history and see how best to lend. One key denominator across the majority of the mobile lending platforms has been the use of one’s M-Pesa transaction history. This means Safaricom PLC’s M-Pesa platform has been crucial and instrumental in enabling mobile lending growth.

The lenders, however, have been accused of taking advantage of their consumers by charging them exorbitant interest rates with some charging as high as 21 percent in three weeks.

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