Sunday, July 12, 2020

Kenyans turning to mobile loans in times of COVID-19

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Kanika Bajaj

Article Title

Kenyans turning to mobile loans in times of COVID-19

Publisher

Global Views 360

Publication Date

July 12, 2020

URL

People of Kenya

People of Kenya | Source: Flightlog via Wikimedia

The economic impact of COVID-19 is felt on the personal finance of people across the world who are looking for ways to tide over the situation. In Kenya, people are lapping the short-term credit in the form of digital loans by mobile money operators. The number of people taking digital loans has doubled during the COVId-19 induced lockdown period.

Boston Consulting Group's Consumer Sentiments Survey conducted in April and May 2020 reported that "In May, 29 percent responded that they had taken out a short-term loan, compared to 16 percent in April. Mobile money operators were the most common sources of this credit”

Kenya is a pioneer in using mobile money transfer services as the key tool for providing financial inclusion to its citizens. A simple money transfer service, M-PESA launched in 2007 has transformed the financial service industry in Kenya. Today mobile money operators are providing multiple services like digital loans, marketplace for small businesses and farmers.

Digital loans are easy to process and disbursed but there are concerns of shaming the defaulters and compromising the data security of clients. The Digital Lenders Association of Kenya (DLAK) which is a body representing the digital lenders of Kenya has distanced from two of their members, Okash and Opesa over unethical practices. These mobile apps have shared the details of defaulting customers with the moneylenders and asking them to recover the money.

DLAK also stated that Opesa and Okash are known for attacking a client's data privacy which is against the Kenyan data protection laws and has additionally spoiled the reputation of digital leaders in Kenya.

In April 2020, Central Bank of Kenya barred unregulated digital mobile lenders from forwarding the names of loan defaulters to credit reference bureaus. A huge number of Kenyans have been recorded on Credit Reference Bureaus by digital money lenders for loans as little as $5.

Central Bank of Kenya governor Patrick Njoroge told during a press conference in May 2020 that the central bank in consultation with the mobile money operators and digital lenders is presently working to develop a model where the borrowers are protected from mistreatment of online moneylenders.

The borrowers are looking up to the regulatory authorities and the industry bodies to come up with a mechanism which will protect their interest in times of such a health and economic emergency.

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February 4, 2021 5:10 PM

How is Nigeria fighting Boko Haram

It was in the 2000s that Nigeria first faced the threat of Boko Haram, the affiliate of Islamic State in Africa. As President Muhammadu Buhari completes five years of being in power, which he got primarily for his plank of defeating Boko Haram, the battle still continues.

Buhari won the presidential election in 2015 against then President Goodluck Jonathan by touting his military background as an asset in defeating Boko Haram, which his predecessor was not able to do. While in his first few months as President he did show results by pushing Boko Haram out of some territories, the Nigerian military was unable to maintain the momentum as Boko Haram struck back with new tactics.

General Muhammadu Buhari, President, Nigeria | Source: Chatham House via Wikimedia

There is widespread distrust towards government officials and Buhari’s popularity has also eroded massively. The citizens are making their dissatisfaction known through anti government demonstrations. Meanwhile the administration seems busy playing blame games and guessing at where things are going wrong in the military’s efforts to contain the violence.

In June 2020, Nigeria saw one of its deadliest attacks in recent times, a hard turn from claims by the military in April that a Boko Haram leader appeared ready to surrender “based on body language.”

Boko Haram which means "Western education is prohibited" in the local Hausa dialect, first began in 2002 under Muhammad Yusuf. They called shunning the western influence in the social sphere and called  for the enforcement of sharia even among non-Muslims. Its leader Mohammad Yusuf was killed in police custody in 2009. However the government authorities failed to utilise this opportunity and showed slackness in rehabilitating the group members, who moved underground, regrouped under new leadership, and continuing to terrorise even larger areas.

Image of Boko Haram terrorists | AK Rockefeller via Flickr

Many factors have been considered in piecing together what led to the creation of Boko Haram and how its existence has been sustained, ranging from support from ISIS, ability to internationalize as a group, and possible assistance from Libya.

The US and Europe have been seen as reluctant to extend any real aid, perhaps due to Nigeria’s oil reserves and a desire to keep African countries destabilised to maintain their neo-colonial stronghold in the region. Internally, corruption and laxity in action of troops has often been cited as big hurdles in controlling the situation.

Two Boko Haram vehicles destroyed. | Source: M. Kindzeka via Wikimedia

As for solutions, many have turned their focus towards rebuilding communities in the aftermath of thousands of people being murdered and displaced due to the ongoing violence. Not just civilian casualties, but a disastrous lack of necessities such as food, water and electricity is leading to a humanitarian crisis in the area falling in the conflict zone between Boko Haram and the military.

President Buhari currently seems slow to admit that Boko Haram cannot be “defeated on the battlefield alone.” Apart from improving the military’s response he must also take measures for alleviating poverty, destroying corruption and ‘de-radicalisation’ of those recruited into Boko Haram.

Some localised efforts are being taken to stabilise the situation by empowering communities to resolve conflicts, improving civil infrastructure, and reintegrating reformed militants.

However, localised efforts are short-term in nature, and their stability and success is greatly determined by the government which understands that more than killing the attackers, trust and active participation of its citizens is needed to resolve this conflict

The impact of Boko Haram on the people of Nigeria has been multifold, and the arsenal to ‘defeat’ Boko Haram must be expanded and redefined.

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