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 4:42 PM

COVID-19 in Iran: Fighting pandemic while facing US sanctions

After backing out of the nuclear deal with Iran in 2018, the United States had toughened the sanctions on petrochemical trade and other vital sectors of Iranian economy. The Iranian government is claiming that those sanctions are heavily affecting their ability to act against COVID-19.

These sanctions forced the Iranian government to significantly change infocus from curbing the spread of infections to stabilizing the economy.  There have been some restrictions but no lockdown imposed on the movement of people as the lockdown would further weaken the economy. Also, a lot of pharmaceutical companies aren’t willing to trade with Iran because of the fear of getting caught up in secondary sanctions, even though the US governments deny any restriction of the same. 

All of this has led to a global outcry against the sanctions. The United Kingdom is pushing the US to ease the sanctions because they believe that the hospitals in Iran are badly overstretched. The UK tried to provide direct support to the country via WHO, but Iran refused any help that didn't come with the lifting of the sanctions. The United Nations High Commissioner for Human rights, Michelle Bachelet, has urged the global community to rethink the existing sanctions on countries like Iran in the light of the current pandemic. The United States also offered humanitarian assistance to the state but was rejected by the Supreme Leader Khamanei, who declared the US as being charlatans and liars, and said that a wise man should not accept medicines from a country alleged of creating the virus. Russia, China and some other medical and rights groups have been urging the Trump administration to lift the sanctions. Over 21,000 lawyers and legal experts in Iran have signed a statement declaring that the US sanctions on Iran are anti-human. On the 26th of March, the US imposed even more sanctions, on more than 17 entities. The sanctions were announced a day after the family of a retired FBI agent claimed that the agent had died while in custody in Iran; two days after Ms. Bachelet made her statement on rethinking sanctions.

The crisis has touched most corners of the country, but it is most severely impacting the poor and working class. While it is older men who are dying in the highest numbers, the economic impact especially hurts women, who are most liable to lose work, and shoulder increased duties, looking after sick relatives and children staying home from school. Iranians’ purchasing power has plummeted in the past two years, as the mismanaged economy shuddered through Donald Trump’s withdrawal from the nuclear deal and the re-imposition of US sanctions. As Nahid, a women’s rights activist put it: “When people met this virus, their nutrition was already poorer, their immune systems were weakened, and many were already unable to afford health care.” Charities and private sector groups are joining together to raise funds for importing equipment and other medical supplies from China to set up facilities of COVID-19. However due to the sanctions it is becoming difficult to move money from Iran to any other country.

Arshi Tirkey, a Junior Fellow with Observer Research Foundation has put quite aptly: “It is true that political instability, corruption and economic mismanagement in Tehran have aggravated the issue; and likewise, this calls for governance reforms and financial transparency initiatives in Iran. But this is not the sole reason for the scarcity of medical equipment and the condition of health infrastructure in the country today. Sanctions remain a central impediment to improving Iran’s capacity to respond to the pandemic.”

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