After a period of lull and quiet enjoyed by mobile loan defaulters – a number of mobile loan providers have rejuvenated their efforts to ensure they get back hundreds of millions owed to them by Kenyans.
Most companies – indeed all of them – have come out determined to get their money. A number of Kenyans have reported a sudden surge in the number of calls and SMS coming from these money providers.
“They will call you 10 times a day – and follow it up with messages. This is harassment. I don’t have food, my children have just reported to school and here you are demanding Ksh6,000 that I took in 2019. Just report me to CRB and I will pay when I am ready,” David Ochola told Mwanahabari.co.ke.
Ochola is not alone.
James* said he recently received a call as he was just about to bury his mother.
“I was standing next to the coffin, and I see this strange number calling. I thought it was one of the guests at the funeral, only for the lady on the other end to demand that I clear Ksh2,500. I lied that I would pay the following day,” said James.
Agnes, on her part, said she has been reported to the CRB already by nearly seven mobile money providers. I stopped picking their calls, but I will pay when I am ready. I don’t have a job currently, and so I am focused on surviving, not paying debts.
Some of the messages seen by Mwanahabari.co.ke appear to have been crafted by psychologists – with a better part of the message promising the borrower more money once they clear their debt.
Tom Ojok says he knows the trick, and can never be lured to clear a loan when he is already a permanent resident at CRB.
“I once owed two banks mobile loan money. I did some business and made Ksh20,000. An agent from one of the bank lied to me – and convinced me to pay the money and I would be able to access another loan right then. I paid, but when I tried to apply, I was told I was still listed at CRB. That month I suffered, and I swore never to repay the loans until I get a permanent job,” he said.
In 2020, the Central Bank of Kenya (CBK) banned all unregulated digital and credit-only lenders from submitting names of loan defaulters for blacklisting at the Credit Reference Bureaus (CRBs), dealing a major blow to their debt recovery mechanisms.
The CBK governor Patrick Njoroge said: “The withdrawal is in response to numerous public complaints over misuse of the credit information system by the unregulated digital and credit-only lenders and particularly their poor responsiveness to customer complaints.”
There are three licensed CRBs in the country — Metropol, TransUnion and Creditinfo International.
The three use the information provided by financial service providers to create reports of each borrower, containing data on all the loans (past and present) that they have ever received and the repayment pattern.
This information is used by lenders to determine whether you qualify for a loan – or not.
Digital Lenders Association of Kenya (DLAK) chair person Kevin Mutiso denounced the move by CBK.
“We condemn with the strongest terms possible the debt shaming tactics employed by some lenders. We are now in talks with these lenders and in two months, we promise a departure from this uncouth behaviour,” said Mr Mutiso. One of the toughest departments in the digital app loans work space is debt collection.
Most staff who were employed by the mobile loan providers were given the options of working as debt collection agents or exit the company as they were not making any money.
The debt collectors are paid a commission on every debt recovered.
The last nail on the lender’s coffin was struck by Google who prohibited digital lenders that engaged in predatory lending from its App store.