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 4:54 PM

The story of reconciliation and development in the genocide hit Rwanda

The genocide and civil war had rendered hundreds of thousand of people homeless and in utter misery. If the Tutsi’s were the primary victims of genocide, the Hutu’s too suffer in the ensuing civil war when Paul Kagame led Rwandan Patriotic Front defeated the government forces and took over Rwanda.

When the genocide stopped by August 1994, the the suspected perpetrators of crime were hounded by the new government forces. Thousands of Hutus left the country and sought refuge in the neighbouring countries. The legal system of Rwanda was in shambles and the vengeance was taking precedence over the quest of justice. Over a hundred thousand suspected genocidaires were put in prison but could not be properly tried due to a strained judicial system.  

Things however started to change from the year 2000, when Paul Kagame became Rwanda’s President. The biggest challenge for him was to rebuild a society that is economically and socially stable. The socio-economic transformation of Rwanda under Kagame is an inspiring story of reconciliation based on acceptance, repentance and forgiveness, the very foundation on which the edifice of Rwanda's reconciliation is standing firmly today.

The first step towards reconciliation started in 2002 when Rwanda introduced the community-based dispute resolution mechanism, Gacaca to try the genocide related crimes. Gacaca was traditionally used in Rwanda to resolve minor disputes. In its new incarnation, the objectives included not only delivering justice, but also strengthening reconciliation, and revealing the truth about the genocide.  

In the Gacaca court the local community elected the judges who then tried the defendants  in front of members of the local community. These community members  were asked to share whatever they knewabout the the role of defendant during the genocide. Gacaca courts functioned extensively during 2005 to 2012 and processed almost two million cases in this duration.

Though Gacaca courts were criticised by many human right organisations for putting speed over fairness in trial, it undoubtedly resulted in giving the opportunity for some genocide survivors to learn what had happened to their relatives. It helped many families of survivors and perpetrators living side by side with peace and contentment in many reconciliation villages, after the ‘perpetrators’ confessed their crimes and expressed repentance.

Taking inspiration from The Truth and Reconciliation Commission” of South Africa, Rwanda established a “National Unity and Reconciliation Commission” in 1999 with an objective to reconcile and unite the Rwandan citizens. This process used four specific tools. (1) Ingandos - to bring normal activities to a standstill in order to reflect on, and find solutions to national challenges, (2) Organising reconciliation summits, (3) Creation of a leadership academy for developing a new set of grassroot leaders, and (4) Frequent exchanges and consultations at inter-community level.

All these efforts along with that of many non-governmental organisations helped to greatly heal the deep wound of sectarian violence in Rwanda. According to the report published by the National Unity and Reconciliation Commission of Rwanda in 2016, over 92% of Rwandans feel that reconciliation is happening.  

Alongside the reconciliation process, the government of Rwanda started spending on health, education and other civic infrastructure which has paid a good dividend in last two decades.

Government expenditure on healthcare facilities per person has gone up sixfold from just $21 in 1995 to $125 in 2014) which contributed to the increase in Life expectancy at birth by 32 years between 1990 and 2016 while  reducing the infant mortality by half since 2000.

The focus on the education sector resulted in almost three quarters of girls and two-thirds of boys now completing primary schooling while literacy rates of adult males and females increased to 75% and 68% respectively.

Rwanda now ranks 6th out 149 countries in the global gender gap index and a high proportion of front-line political positions, including 61% of the parliamentary seats are occupied by women. Rwandan women possess the right to inherit property and can also pass citizenship to their children.

The newfound peace, stability and reconciliation in Rwanda gave a boost to the country’s economy which saw per capita GDP growth from $200 to almost $800 between 1994 and 2017. In 2018 the GDP grew at  8.6% and the county rated the second-best place to do business in Africa.

Rwanda today is a shining example that a country with a long and painful history of violent sectarianism, can achieve great success, if it takes every section of the population along on a path of peace, unity and reconciliation.

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