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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The year 2020 will be remembered as the year of disasters in the history of humankind. A devastating tragedy struck Beirut, the capital of Lebanon on August 4, 2020, in the form of a massive explosion which occurred in the port area and ripped a large part of the town .
As per initial estimate the death toll stands at 157 with more than 5000 people severely bruised and thousands displaced from their homes. The incredible force of the blast could be felt as far asCyprus, which is at a distance of 250 kms from the explosion site.
A giant red cloud of smoke erupted in the clear skies followed by a deafening ‘bang’ and smashing of windows. "First we heard one sound. Seconds later there was a big explosion. All hell broke loose and I saw people thrown five or six metres" said Ibrahim Zoobi, who worked near the port. Satellite images show that warehouses and buildings within a radius of 2km from the site of the blast were completely destroyed, ending up in debris.
The intensity of the blast was equivalent to almost ‘2.2 kilotons of TNT’, according to an analyst and weapons expert. The aftermath included scenes of jam-packed hospitals, running without proper electricity connection, increased demand of blood donations and generators and agonized cries of people searching for their loved ones amongst the rubble filled roads.
Michel Aoun, the President of Lebanon | Source: Wikimedia
American President Donald Trump was quick to tweet about calling the blast a ‘terrible attack’. However, according to Michel Aoun, the President of Lebanon, the actual culprit of the blast was the 2,750 tonnes of fertilizer, ammonium nitrate, stored in one of the warehouses in the port area which caught fire. This explosive material was reportedly confiscated from a Russian cargo ship, back in 2014, when it made an uninformed stop at the Lebanese port.
Ammonium nitrate is a white substance used as a fertilizer as well as an explosive. It cannot explode on coming in contact with air but can detonate immediately as it encounters a flammable substance like oil or fire. Being an oxidiser, it will accelerate the severity of the explosion and also lead to release of toxic gases like nitrogen dioxide.
Boaz Hayoun, one of the top bomb experts of Israel, states “Before the big explosion, in the center of the fire, you can see sparks, you can hear sounds like popcorn and you can hear whistles”, which is a strong indication of fireworks. This might point towards seemingly inadequate warehouse management issues in Beirut, as such substances might have come across the explosive nitrates and instigated the blast. The safety protocols were simply not followed, despite being aware about the presence of a ‘ticking time bomb’ in the warehouse.
As Beirut is fighting the COVID-19 pandemic and a financial crisis, it was definitely not ready for another blow. Beirut’s grain storage tower, the largest in Lebanon, was also engulfed in the flames, hampering the entire country’s food security. "It's an economic crisis, a financial crisis, a political crisis, a health crisis, and now this horrible explosion” says Tamara Alrifai, spokesperson for the UN Relief and Works Agency for Palestine Refugees in the Near East (UNRWA).
France, the US, Italy, Turkey, Iran, EU, and OIC came up with the offer of help and show support for the people of Beirut. Emmanuel Macron, the President of France, was the first foreign leader to visit the crisis-hit Beirut. While he consoled the citizens, their grief turned into anger as they chanted the word ‘Revolution’.
There is great anger among the citizens against the government, whom they accuse of being corrupt, sectarian, unaccountable, and out of touch with the common people. The intense protest by the people on the street forced the Prime Minister Hassan Diab to resign along with his cabinet on August 10, 2020.
The economic cost of the Beirut blast, where over 300,000 people have become homeless after their homes get destroyed, is estimated to be $15 Billion. Lebanon, which was already on the verge of economic collapse before this disaster struck, may find it impossible to withstand such a blow to the economy. It will need the support from the world over to rebuild Beirut.
A donor conference for rebuilding Beirut received a total pledge of about $300 million. Though it is a minuscule figure as compared to the destruction in Beirut, it will help to tide over the immediate humanitarian crisis. Apart from this Turkey has offered to help rebuild the port of Beirut and many countries are sending relief supplies.
The days ahead for the citizens of Beirut are going to be challenging as the country navigates the sectarian divide during the formation of a new government. It will be keenly watched by the citizens as well as the international community, whether Lebanon will discard its entrenched ruling elite and reject the toxic sectarian divide to elect an inclusive government or continue to perpetuate the misery on the common citizens.
