A vibrant morning conversation on Classic 105 FM recently put Kenya’s soaring debt burden under the spotlight.
Show hosts Maina Kageni and Mwalimu King’ang’i discussed the “Shylock economy,” a topic prominently featured on the front page of The Standard Newspaper.
The discussion quickly revealed the deep financial holes many Kenyans find themselves in.
Why Kenyans Shun Banks
Listeners explained that the demand for shylocks has been created largely because traditional banks are no longer lending money readily.
Maina Kageni suggested that any bank that commits to only lending to Kenyans, and not the government, would quickly become number one in the market.
There was a time when banks actively sought out clients, offering loans of KES 1 million or KES 2 million without deeply questioning the applicant’s existing debt load. However, the current banking environment is constrained.
Non-performing loans (NPLs) have recently reached KES 69 billion. When banks hesitate to lend, shylocks quickly fill the financial void.
Testimonials of Crippling Debt
Listeners shared staggering details of their financial commitments to both formal and informal lenders. One caller revealed she owed KES 52,000 from a church loan and a further KES 25,000 from M-Shwari.
“My name is Wambui from Limuru. I have a lot of problems. I have a Hustler Fund loan and another for M-Shwari, Ksh 25k, which I’m supposed to repay today, but I don’t have. I also have a catholic church loan that I’ve taken twice,” she narrated.
“The catholic church has a Sacco there. M-Shwari gave me Ksh23k, and it has accrued interest of Sh 2k. I owe the church Ksh52k and Hustler Fund Ksh 2k,” she added.
One female caller shared a particularly draining story. She stated that she had loans dating back to 2019. Following fines and accrued penalties, her total debt was around KES 100,000.
“I lost my job shortly after all that, and then the business I was doing again. So, they keep on calling up today.”
For her, the situation became critical due to her son’s need for daily KES 400 medication, making loan repayment currently impossible.
Another devastating consequence came from listener Richard, who said his shylock borrowing had caused him to lose KES 5 million this year alone, leading to his business being auctioned.
The Harsh Tactics of Shylock Lenders
Listeners also highlighted the predatory nature of the shylock industry. Peter Kemboi noted that while shylocks give loans happily, the aftermath of default is “so messy”.
Jeff, another listener, explained that shylocks take advantage of “gullible Kenyans”. They strategically weave the loan contract to ensure the borrower defaults. This allows the shylock to sell the mortgaged item at a price higher than the initial loan amount, which is how they thrive.
Furthermore, some shylocks are employing aggressive collection methods. Jeff claimed that many shylocks are using the services of police and Debt Collection Agency (DCA) officers to track individuals.
by moses sagwe
