The Shylocks are taking over the financial sector of Kenya. The reason behind all this is because of the poor financial sector.
Banks are very slow to catch up with new technological developments and the same time the regulations available are very extremely unreliable and challenging to them.
For instance, banks are so fearful to take risky ventures.
Take a look at Imperial bank and Chase bank. Chase bank was service several SME businesses but it ended up being placed in receivership by Central bank of Kenya.
It took commercial banks 10 years to launch a platform to transfer funds within them instantly that is PesaLink.
PesaLink is a mobile and electronic money transaction service across the board.
At first, when Mpesa was being launched in Kenya it was the commercial banks that ganged up together to ask the regulator to bar Mshwari from operating.
The reasons behind the case were that it will cause Money fraud but that was not the truth. Banks were afraid of competition.
We all know what happened, Safaricom succeeded in the case and continued with its operations and now it’s one of the biggest company in Sub Saharan Africa.
Later Safaricom started working with banks.
Safaricom, for instance, launched Mshwari in Partnership with Commercial Bank of Africa. Mshwari was launched through this partnership.
Parliament passed loan caps law in 2016. The loan caps prevented the bank’s interest, not to over 14.5%.
With the caps being passed through Shylocks took advantage and started to lend poor Kenyans at high rates.
To get a loan from Shylocks in Kenya you need either to sign a contract or give electrical appliances as security. Some have even started lending on title deeds and logbooks.
Several other play store apps have come out to lend loans.
The commercial Banks have not been left behind. They too have joined the Shylock business with Mshwari of CBA partnering with Safaricom, KCB partnership formed KCB-Mpesa and of lately Barclays bank launched Timiza.
Does this Shylock kind of business have returns?
This kind of business is very high lucrative since Caps law by Central Bank doesn’t apply here.
For instance Fintech and subsidiary of Equity bank charge 10% per month hence making up to 120% per annum.
Most of this Shylocks maintain that this is not interest but transaction fees.
Consumer Federation of Kenya (Cofek) still argues that this total exploitation to the consumer.
Apart from banks and other organizations some people also offer they offer Shylock kind of services.
A research conducted on Kisii Country by a popular News site found out that some arrears people are offered with emergency loans of up to 20% per month.
Due to this kind of challenges several people are turning to MFI and Saccos for loans and saving.
One such MFI is Ngao Credit. “In the last three years, our SME portfolio has grown by over 40percentt,” said Trevor Kimani, the Chief Operating Officer of Ngao Credit.
We would like to request the government to come out and protect its citizen from the exploitation of Shylocks
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