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Mobile Loans Ponzi
tom_boy
#1 Posted : Monday, January 07, 2019 4:23:39 PM
Rank: Member


Joined: 2/20/2007
Posts: 719
Banks have gone as far as offering day loans interest free on mobile. What other use can this money be put to except gambling? Who borrows money in the morning with confidence of repaying by midnight other than a gambler?

What does this portend for out banks? What percent of money is lent to mobile fellas? If an event was to happen that rendered Wanjikus unable to pay, would we see banks collapsing ala mortgage crisis? What kind of event would this be?

Its very scary. I think banks are getting careless. Wanjiku is doing a ponzi scheme via mobile lending from different offerers, at some point the cookie will crumble!
They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
Angelica _ann
#2 Posted : Monday, January 07, 2019 4:34:45 PM
Rank: Elder


Joined: 12/7/2012
Posts: 10,865
Today, I received this from Safaricom which I think is shocking >>>>


Dear customer, Fuliza M-PESA is a new service by Safaricom to help you send money and Lipa na M-PESA when you have insufficient funds. Dial *234# to opt in.
In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
murchr
#3 Posted : Monday, January 07, 2019 4:40:24 PM
Rank: Elder


Joined: 2/26/2012
Posts: 14,883
tom_boy wrote:
Banks have gone as far as offering day loans interest free on mobile. What other use can this money be put to except gambling? Who borrows money in the morning with confidence of repaying by midnight other than a gambler? Mama Mboga

What does this portend for out banks? What percent of money is lent to mobile fellas? If an event was to happen that rendered Wanjikus unable to pay, would we see banks collapsing ala mortgage crisis? What kind of event would this be? CBK data is available online....2019 is the year to take charge go peruse the pages

Its very scary. I think banks are getting careless. Wanjiku is doing a ponzi scheme via mobile lending from different offerers, at some point the cookie will crumble! You clearly do not know what a ponzi is



Quote:
Today, I received this from Safaricom which I think is shocking >>>>


Dear customer, Fuliza M-PESA is a new service by Safaricom to help you send money and Lipa na M-PESA when you have insufficient funds. Dial *234# to opt in.


If you have been using airtime on credit (Okoa Jahazi) why should this scare you?
"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
eangaga
#4 Posted : Monday, January 07, 2019 4:44:41 PM
Rank: New-farer


Joined: 11/15/2016
Posts: 19
I think the amounts are so small the banks really dont care. They are getting super high returns on them I would imagine. Lend 50 shillings and the fellow would payback 100 shillings by midnight. Thats a great return.
The lending rate might be controlled but fees and other administrative charges are not . So thats where they get their butter. Its lucrative. They are gamblingsmile

tom_boy wrote:
Banks have gone as far as offering day loans interest free on mobile. What other use can this money be put to except gambling? Who borrows money in the morning with confidence of repaying by midnight other than a gambler?

What does this portend for out banks? What percent of money is lent to mobile fellas? If an event was to happen that rendered Wanjikus unable to pay, would we see banks collapsing ala mortgage crisis? What kind of event would this be?

Its very scary. I think banks are getting careless. Wanjiku is doing a ponzi scheme via mobile lending from different offerers, at some point the cookie will crumble!

ombaalbt
#5 Posted : Monday, January 07, 2019 4:59:21 PM
Rank: New-farer


Joined: 5/19/2014
Posts: 68
Location: Migori
eangaga wrote:
I think the amounts are so small the banks really dont care. They are getting super high returns on them I would imagine. Lend 50 shillings and the fellow would payback 100 shillings by midnight. Thats a great return.
The lending rate might be controlled but fees and other administrative charges are not . So thats where they get their butter. Its lucrative. They are gamblingsmile

tom_boy wrote:
Banks have gone as far as offering day loans interest free on mobile. What other use can this money be put to except gambling? Who borrows money in the morning with confidence of repaying by midnight other than a gambler?

What does this portend for out banks? What percent of money is lent to mobile fellas? If an event was to happen that rendered Wanjikus unable to pay, would we see banks collapsing ala mortgage crisis? What kind of event would this be?

Its very scary. I think banks are getting careless. Wanjiku is doing a ponzi scheme via mobile lending from different offerers, at some point the cookie will crumble!



@eangaga. True the amounts are small but you are also exaggerating the rate. The total charge for the bank offering this service is 4.08% per month. And it only applies once you go past midnight.
Learning to sit on my hands
mulla
#6 Posted : Monday, January 07, 2019 5:03:57 PM
Rank: Member


Joined: 6/15/2013
Posts: 277
tom_boy wrote:
Banks have gone as far as offering day loans interest free on mobile. What other use can this money be put to except gambling? Who borrows money in the morning with confidence of repaying by midnight other than a gambler?

What does this portend for out banks? What percent of money is lent to mobile fellas? If an event was to happen that rendered Wanjikus unable to pay, would we see banks collapsing ala mortgage crisis? What kind of event would this be?

Its very scary. I think banks are getting careless. Wanjiku is doing a ponzi scheme via mobile lending from different offerers, at some point the cookie will crumble!


The banks know most clients will not pay the borrowed amount by midnight and this loan rolls over to pay in a month + interest. This is just a marketing ploy to advertise their loan products. Most borrowers will fear being listed on CRB so will make an honest effort to repay within the month.
Banks/Mobile lenders are raking in crazy interest from these loans, example, KCB on a 20k monthly loan 4.25%(51%p/a)
tom_boy
#7 Posted : Monday, January 07, 2019 5:58:08 PM
Rank: Member


Joined: 2/20/2007
Posts: 719
I dont see how some people do not see mobile loans as a form of ponzi scheme. Njoroge borrows from A to repay B. Each time his loan gets bigger and bigger until eventually he will default.

I bet most people do not do any value creating work with this cash.

What % of total loans goes to mobile lending?
What % of this ends up in sport pesa et al?

Unless CBK puts a cap on how much a bank can give in mobile loans as a % of total lending, there is serious systemic risk in this ponzi scheme.

Bookmark this post!

Everyone thought corporate bonds were safe...... not any more.

Everyone thought mortgage crisis could never happen.....

Even the pros are as greedy as you are. They will chase high profits at expense of high risk because they get higher bonuses.
They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
Gathige
#8 Posted : Monday, January 07, 2019 6:10:20 PM
Rank: Veteran


Joined: 3/29/2011
Posts: 2,083
tom_boy wrote:
I dont see how some people do not see mobile loans as a form of ponzi scheme. Njoroge borrows from A to repay B. Each time his loan gets bigger and bigger until eventually he will default.

I bet most people do not do any value creating work with this cash.

What % of total loans goes to mobile lending?
What % of this ends up in sport pesa et al?



The part I like about mobile money is the ease by which the meet the customers needs. You can imagine someone who needs fare to get to a work site who will be paid at the end of the day. He borrows the fare, gets back in the evening and then repays his loan and builds his credit profile. The overall interest rate may be higher than conventional rates but the ease and convenice is great.
"Things that matter most must never be at the mercy of things that matter least." Goethe
Angelica _ann
#9 Posted : Monday, January 07, 2019 6:22:22 PM
Rank: Elder


Joined: 12/7/2012
Posts: 10,865
Gathige wrote:
tom_boy wrote:
I dont see how some people do not see mobile loans as a form of ponzi scheme. Njoroge borrows from A to repay B. Each time his loan gets bigger and bigger until eventually he will default.

I bet most people do not do any value creating work with this cash.

What % of total loans goes to mobile lending?
What % of this ends up in sport pesa et al?



The part I like about mobile money is the ease by which the meet the customers needs. You can imagine someone who needs fare to get to a work site who will be paid at the end of the day. He borrows the fare, gets back in the evening and then repays his loan and builds his credit profile. The overall interest rate may be higher than conventional rates but the ease and convenice is great.


Would you borrow from a bank if you know outright the interest rate is 50% pa, of course not. I think therein lies the risk to the greater economy since i believe it is not sustainable in the long run.
In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
Lolest!
#10 Posted : Monday, January 07, 2019 6:56:25 PM
Rank: Elder


Joined: 3/18/2011
Posts: 11,734
Location: Kianjokoma
Angelica _ann wrote:
Gathige wrote:
tom_boy wrote:
I dont see how some people do not see mobile loans as a form of ponzi scheme. Njoroge borrows from A to repay B. Each time his loan gets bigger and bigger until eventually he will default.

I bet most people do not do any value creating work with this cash.

What % of total loans goes to mobile lending?
What % of this ends up in sport pesa et al?



The part I like about mobile money is the ease by which the meet the customers needs. You can imagine someone who needs fare to get to a work site who will be paid at the end of the day. He borrows the fare, gets back in the evening and then repays his loan and builds his credit profile. The overall interest rate may be higher than conventional rates but the ease and convenice is great.


Would you borrow from a bank if you know outright the interest rate is 50% pa, of course not. I think therein lies the risk to the greater economy since i believe it is not sustainable in the long run.

No you wouldn't but the math biz guys are doing is simple what I end up with minus what I've spent(per day).

Remember, life is very expensive in the kadogo economy
Laughing out loudly smile Applause d'oh! Sad Drool Liar Shame on you Pray
Gathige
#11 Posted : Monday, January 07, 2019 8:19:00 PM
Rank: Veteran


Joined: 3/29/2011
Posts: 2,083
Lolest! wrote:
Angelica _ann wrote:
Gathige wrote:
tom_boy wrote:
I dont see how some people do not see mobile loans as a form of ponzi scheme. Njoroge borrows from A to repay B. Each time his loan gets bigger and bigger until eventually he will default.

I bet most people do not do any value creating work with this cash.

What % of total loans goes to mobile lending?
What % of this ends up in sport pesa et al?



The part I like about mobile money is the ease by which the meet the customers needs. You can imagine someone who needs fare to get to a work site who will be paid at the end of the day. He borrows the fare, gets back in the evening and then repays his loan and builds his credit profile. The overall interest rate may be higher than conventional rates but the ease and convenice is great.


Would you borrow from a bank if you know outright the interest rate is 50% pa, of course not. I think therein lies the risk to the greater economy since i believe it is not sustainable in the long run.

No you wouldn't but the math biz guys are doing is simple what I end up with minus what I've spent(per day).

Remember, life is very expensive in the kadogo economy


That's the point. If you borrow 100 bob and pay 20 bob as interest, the math looks very expensive at 20%. But if the 100 bob got you fare for Mjengo kibarua and got 300 bob, the returns now become 200%. Both the cost and returns look abnormal but in Kadogo economy it's normal. If the lender was to lose even a quarter of the loans, they still have a margin to operate. Going by the number of apps in the market, the business is booming. SACCOS have also introduced MSacco where u get pesa pap, but at huge interest. They are all riding on the enabling technology and the demand.
"Things that matter most must never be at the mercy of things that matter least." Goethe
murchr
#12 Posted : Monday, January 07, 2019 8:28:12 PM
Rank: Elder


Joined: 2/26/2012
Posts: 14,883
tom_boy wrote:
I dont see how some people do not see mobile loans as a form of ponzi scheme. Njoroge borrows from A to repay B. Each time his loan gets bigger and bigger until eventually he will default.

I bet most people do not do any value creating work with this cash.

What % of total loans goes to mobile lending?
What % of this ends up in sport pesa et al?

Unless CBK puts a cap on how much a bank can give in mobile loans as a % of total lending, there is serious systemic risk in this ponzi scheme.

Bookmark this post!

Everyone thought corporate bonds were safe...... not any more.

Everyone thought mortgage crisis could never happen.....

Even the pros are as greedy as you are. They will chase high profits at expense of high risk because they get higher bonuses.



Your bank takes your some if not all of your savings to give Njoroge that loan if you save 100K and they give Njoroge 20K in which he should return 20500 by the end of the day....the bank keeps 500 your the 20K from your savings is recouped ready to be given to Njoroge another day or to Kamau.

Meanwhile part of your 80K has been lent to others eg the govt thru treasury bills, Njeri the gal opening a new hair salon, Ndungu the man buying a plot all have smaller interest rates but the bank is still eating something (5%, 14%, 20%, 50%) depending on who it has lent your money.

The CBK cap is on at 14% the rest are charges

As for your 100K at the end of the year, the bank thanks you and gives you 5/-. Thank you for your service
"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
MaichBlack
#13 Posted : Monday, January 07, 2019 8:41:54 PM
Rank: Elder


Joined: 7/22/2009
Posts: 7,273
Lolest! wrote:
Angelica _ann wrote:
Gathige wrote:
tom_boy wrote:
I dont see how some people do not see mobile loans as a form of ponzi scheme. Njoroge borrows from A to repay B. Each time his loan gets bigger and bigger until eventually he will default.

I bet most people do not do any value creating work with this cash.

What % of total loans goes to mobile lending?
What % of this ends up in sport pesa et al?



The part I like about mobile money is the ease by which the meet the customers needs. You can imagine someone who needs fare to get to a work site who will be paid at the end of the day. He borrows the fare, gets back in the evening and then repays his loan and builds his credit profile. The overall interest rate may be higher than conventional rates but the ease and convenice is great.


Would you borrow from a bank if you know outright the interest rate is 50% pa, of course not. I think therein lies the risk to the greater economy since i believe it is not sustainable in the long run.

No you wouldn't but the math biz guys are doing is simple what I end up with minus what I've spent(per day).

Remember, life is very expensive in the kadogo economy

These loans have their target audience and most wazuans are not in that category. Mama mboga takes a loan in the morning buys her wares sells them by evening and repays the loan (even if it rolls over) If she borrows 2700, turn over is 5,000/= and she pays 3,000/=, she just made a cool 2,000/= she couldn't have made. Hiyo ndiyo hesabu yake which makes a lot of sense!!! Come December, she decides to start selling live chicken on the side. She borrows 20,000/= at the beginning of the month, buys and sells chicken the whole month, at the end of the month she has gross of 60,000/= from chicken sales for the month she pays say 24,000/= and remains with 36,000/= she couldn't have made.

It suddenly starts raining, a hawker with no "float" quickly borrows some money, rushes to Kamukunji or wherever buys umbrellas sells most of them the same day, makes a tidy sum and repays the same day or within 30 days depending on his "business plan".

Not everything in the market is meant for everyone.
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
rwitre
#14 Posted : Monday, January 07, 2019 9:20:06 PM
Rank: Member


Joined: 3/8/2018
Posts: 374
Location: Nairobi
MaichBlack wrote:
Lolest! wrote:
Angelica _ann wrote:
Gathige wrote:
tom_boy wrote:
I dont see how some people do not see mobile loans as a form of ponzi scheme. Njoroge borrows from A to repay B. Each time his loan gets bigger and bigger until eventually he will default.

I bet most people do not do any value creating work with this cash.

What % of total loans goes to mobile lending?
What % of this ends up in sport pesa et al?



The part I like about mobile money is the ease by which the meet the customers needs. You can imagine someone who needs fare to get to a work site who will be paid at the end of the day. He borrows the fare, gets back in the evening and then repays his loan and builds his credit profile. The overall interest rate may be higher than conventional rates but the ease and convenice is great.


Would you borrow from a bank if you know outright the interest rate is 50% pa, of course not. I think therein lies the risk to the greater economy since i believe it is not sustainable in the long run.

No you wouldn't but the math biz guys are doing is simple what I end up with minus what I've spent(per day).

Remember, life is very expensive in the kadogo economy

These loans have their target audience and most wazuans are not in that category. Mama mboga takes a loan in the morning buys her wares sells them by evening and repays the loan (even if it rolls over) If she borrows 2700, turn over is 5,000/= and she pays 3,000/=, she just made a cool 2,000/= she couldn't have made. Hiyo ndiyo hesabu take which makes a lot of sense!!! Come December, she decides to start selling live chicken on the side. She borrows 20,000/= at the beginning of the month, buys and sells chicken the whole month, at the end of the month she has gross of 60,000/= from chicken sales for the month she pays say 24,000/= and remains with 36,000/= she couldn't have made.

It suddenly starts raining, a hawker with no "float" quickly borrows some money, rushes to Kamukunji or wherever buys umbrellas sells most of them the same day, makes a tidy sum and repays the same day or within 30 days depending on his "business plan".

Not everything in the market is meant for everyone.


Applause Applause Applause Applause
tom_boy
#15 Posted : Tuesday, January 08, 2019 7:03:28 AM
Rank: Member


Joined: 2/20/2007
Posts: 719
MaichBlack wrote:
Lolest! wrote:
Angelica _ann wrote:
Gathige wrote:
tom_boy wrote:
I dont see how some people do not see mobile loans as a form of ponzi scheme. Njoroge borrows from A to repay B. Each time his loan gets bigger and bigger until eventually he will default.

I bet most people do not do any value creating work with this cash.

What % of total loans goes to mobile lending?
What % of this ends up in sport pesa et al?



The part I like about mobile money is the ease by which the meet the customers needs. You can imagine someone who needs fare to get to a work site who will be paid at the end of the day. He borrows the fare, gets back in the evening and then repays his loan and builds his credit profile. The overall interest rate may be higher than conventional rates but the ease and convenice is great.


Would you borrow from a bank if you know outright the interest rate is 50% pa, of course not. I think therein lies the risk to the greater economy since i believe it is not sustainable in the long run.

No you wouldn't but the math biz guys are doing is simple what I end up with minus what I've spent(per day).

Remember, life is very expensive in the kadogo economy

These loans have their target audience and most wazuans are not in that category. Mama mboga takes a loan in the morning buys her wares sells them by evening and repays the loan (even if it rolls over) If she borrows 2700, turn over is 5,000/= and she pays 3,000/=, she just made a cool 2,000/= she couldn't have made. Hiyo ndiyo hesabu take which makes a lot of sense!!! Come December, she decides to start selling live chicken on the side. She borrows 20,000/= at the beginning of the month, buys and sells chicken the whole month, at the end of the month she has gross of 60,000/= from chicken sales for the month she pays say 24,000/= and remains with 36,000/= she couldn't have made.

It suddenly starts raining, a hawker with no "float" quickly borrows some money, rushes to Kamukunji or wherever buys umbrellas sells most of them the same day, makes a tidy sum and repays the same day or within 30 days depending on his "business plan".

Not everything in the market is meant for everyone.


Those are great stories but is there data that this is what is actually happening? I understand borrowing a few times to cover some shortfall in a business. I dont get this mama mboga who wakes up daily to borrow money and repay in the evening. I dont get these hawker - rain scenarios occuring very often in a year. Do these people account for the billions traded daily on mobile lending? I think not.

Even if it were to be the case, what kadogo economy are we building? One dependent on exorbitant interest rates. As volumes grow, wont these high rates in themselves accelerate inflation? I am not sure that mobile loans can provide necessary break through momentum for any business. Its a loan that helps you marktime with an illusion of progress or even slowly drag you down. One default, a few bad business days and you are a defaulter, back to square 0.

Meanwhile, mobile loans deny SMEs much needed capital.
They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
murchr
#16 Posted : Tuesday, January 08, 2019 8:00:44 AM
Rank: Elder


Joined: 2/26/2012
Posts: 14,883
tom_boy wrote:
MaichBlack wrote:
Lolest! wrote:
Angelica _ann wrote:
Gathige wrote:
tom_boy wrote:
I dont see how some people do not see mobile loans as a form of ponzi scheme. Njoroge borrows from A to repay B. Each time his loan gets bigger and bigger until eventually he will default.

I bet most people do not do any value creating work with this cash.

What % of total loans goes to mobile lending?
What % of this ends up in sport pesa et al?



The part I like about mobile money is the ease by which the meet the customers needs. You can imagine someone who needs fare to get to a work site who will be paid at the end of the day. He borrows the fare, gets back in the evening and then repays his loan and builds his credit profile. The overall interest rate may be higher than conventional rates but the ease and convenice is great.


Would you borrow from a bank if you know outright the interest rate is 50% pa, of course not. I think therein lies the risk to the greater economy since i believe it is not sustainable in the long run.

No you wouldn't but the math biz guys are doing is simple what I end up with minus what I've spent(per day).

Remember, life is very expensive in the kadogo economy

These loans have their target audience and most wazuans are not in that category. Mama mboga takes a loan in the morning buys her wares sells them by evening and repays the loan (even if it rolls over) If she borrows 2700, turn over is 5,000/= and she pays 3,000/=, she just made a cool 2,000/= she couldn't have made. Hiyo ndiyo hesabu take which makes a lot of sense!!! Come December, she decides to start selling live chicken on the side. She borrows 20,000/= at the beginning of the month, buys and sells chicken the whole month, at the end of the month she has gross of 60,000/= from chicken sales for the month she pays say 24,000/= and remains with 36,000/= she couldn't have made.

It suddenly starts raining, a hawker with no "float" quickly borrows some money, rushes to Kamukunji or wherever buys umbrellas sells most of them the same day, makes a tidy sum and repays the same day or within 30 days depending on his "business plan".

Not everything in the market is meant for everyone.


Those are great stories but is there data that this is what is actually happening? I understand borrowing a few times to cover some shortfall in a business. I dont get this mama mboga who wakes up daily to borrow money and repay in the evening. I dont get these hawker - rain scenarios occuring very often in a year. Do these people account for the billions traded daily on mobile lending? I think not.

Even if it were to be the case, what kadogo economy are we building? One dependent on exorbitant interest rates. As volumes grow, wont these high rates in themselves accelerate inflation? I am not sure that mobile loans can provide necessary break through momentum for any business. Its a loan that helps you marktime with an illusion of progress or even slowly drag you down. One default, a few bad business days and you are a defaulter, back to square 0.

Meanwhile, mobile loans deny SMEs much needed capital.


Cbk website has the data. Feel free to analyse
"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
jmbada
#17 Posted : Tuesday, January 08, 2019 9:33:31 AM
Rank: Member


Joined: 1/1/2011
Posts: 375
murchr wrote:
tom_boy wrote:
MaichBlack wrote:
Lolest! wrote:
Angelica _ann wrote:
Gathige wrote:
tom_boy wrote:
I dont see how some people do not see mobile loans as a form of ponzi scheme. Njoroge borrows from A to repay B. Each time his loan gets bigger and bigger until eventually he will default.

I bet most people do not do any value creating work with this cash.

What % of total loans goes to mobile lending?
What % of this ends up in sport pesa et al?



The part I like about mobile money is the ease by which the meet the customers needs. You can imagine someone who needs fare to get to a work site who will be paid at the end of the day. He borrows the fare, gets back in the evening and then repays his loan and builds his credit profile. The overall interest rate may be higher than conventional rates but the ease and convenice is great.


Would you borrow from a bank if you know outright the interest rate is 50% pa, of course not. I think therein lies the risk to the greater economy since i believe it is not sustainable in the long run.

No you wouldn't but the math biz guys are doing is simple what I end up with minus what I've spent(per day).

Remember, life is very expensive in the kadogo economy

These loans have their target audience and most wazuans are not in that category. Mama mboga takes a loan in the morning buys her wares sells them by evening and repays the loan (even if it rolls over) If she borrows 2700, turn over is 5,000/= and she pays 3,000/=, she just made a cool 2,000/= she couldn't have made. Hiyo ndiyo hesabu take which makes a lot of sense!!! Come December, she decides to start selling live chicken on the side. She borrows 20,000/= at the beginning of the month, buys and sells chicken the whole month, at the end of the month she has gross of 60,000/= from chicken sales for the month she pays say 24,000/= and remains with 36,000/= she couldn't have made.

It suddenly starts raining, a hawker with no "float" quickly borrows some money, rushes to Kamukunji or wherever buys umbrellas sells most of them the same day, makes a tidy sum and repays the same day or within 30 days depending on his "business plan".

Not everything in the market is meant for everyone.


Those are great stories but is there data that this is what is actually happening? I understand borrowing a few times to cover some shortfall in a business. I dont get this mama mboga who wakes up daily to borrow money and repay in the evening. I dont get these hawker - rain scenarios occuring very often in a year. Do these people account for the billions traded daily on mobile lending? I think not.

Even if it were to be the case, what kadogo economy are we building? One dependent on exorbitant interest rates. As volumes grow, wont these high rates in themselves accelerate inflation? I am not sure that mobile loans can provide necessary break through momentum for any business. Its a loan that helps you marktime with an illusion of progress or even slowly drag you down. One default, a few bad business days and you are a defaulter, back to square 0.

Meanwhile, mobile loans deny SMEs much needed capital.


Cbk website has the data. Feel free to analyse

Banks are currently capped at 13% maximum per annum. The new lending products are their only option to earn from fees.so you can be assured that they are praying that midnight passes on the intraday loan products.
tom_boy
#18 Posted : Tuesday, January 08, 2019 11:41:28 AM
Rank: Member


Joined: 2/20/2007
Posts: 719
murchr wrote:
tom_boy wrote:
MaichBlack wrote:
Lolest! wrote:
Angelica _ann wrote:
Gathige wrote:
tom_boy wrote:
I dont see how some people do not see mobile loans as a form of ponzi scheme. Njoroge borrows from A to repay B. Each time his loan gets bigger and bigger until eventually he will default.

I bet most people do not do any value creating work with this cash.

What % of total loans goes to mobile lending?
What % of this ends up in sport pesa et al?



The part I like about mobile money is the ease by which the meet the customers needs. You can imagine someone who needs fare to get to a work site who will be paid at the end of the day. He borrows the fare, gets back in the evening and then repays his loan and builds his credit profile. The overall interest rate may be higher than conventional rates but the ease and convenice is great.


Would you borrow from a bank if you know outright the interest rate is 50% pa, of course not. I think therein lies the risk to the greater economy since i believe it is not sustainable in the long run.

No you wouldn't but the math biz guys are doing is simple what I end up with minus what I've spent(per day).

Remember, life is very expensive in the kadogo economy

These loans have their target audience and most wazuans are not in that category. Mama mboga takes a loan in the morning buys her wares sells them by evening and repays the loan (even if it rolls over) If she borrows 2700, turn over is 5,000/= and she pays 3,000/=, she just made a cool 2,000/= she couldn't have made. Hiyo ndiyo hesabu take which makes a lot of sense!!! Come December, she decides to start selling live chicken on the side. She borrows 20,000/= at the beginning of the month, buys and sells chicken the whole month, at the end of the month she has gross of 60,000/= from chicken sales for the month she pays say 24,000/= and remains with 36,000/= she couldn't have made.

It suddenly starts raining, a hawker with no "float" quickly borrows some money, rushes to Kamukunji or wherever buys umbrellas sells most of them the same day, makes a tidy sum and repays the same day or within 30 days depending on his "business plan".

Not everything in the market is meant for everyone.


Those are great stories but is there data that this is what is actually happening? I understand borrowing a few times to cover some shortfall in a business. I dont get this mama mboga who wakes up daily to borrow money and repay in the evening. I dont get these hawker - rain scenarios occuring very often in a year. Do these people account for the billions traded daily on mobile lending? I think not.

Even if it were to be the case, what kadogo economy are we building? One dependent on exorbitant interest rates. As volumes grow, wont these high rates in themselves accelerate inflation? I am not sure that mobile loans can provide necessary break through momentum for any business. Its a loan that helps you marktime with an illusion of progress or even slowly drag you down. One default, a few bad business days and you are a defaulter, back to square 0.

Meanwhile, mobile loans deny SMEs much needed capital.


Cbk website has the data. Feel free to analyse

Kindly point me to the page with data showing how much lending is going to mobile loans as an asset class vis a vis others like agriculture, real estate etc etc

The only thing I can find is data under 2017 annual report. There is no data on loans given as mobile loans even in this report. Should mobile phone loans not be considered a different risk category worthy of tracking?
They must find it difficult....... those who have taken authority as the truth, rather than truth as the authority. -G. Massey.
sitaki.kujulikana
#19 Posted : Tuesday, January 08, 2019 1:29:27 PM
Rank: Veteran


Joined: 8/25/2012
Posts: 1,823
this form of credit has always existed, in the form of loan sharks - and contrary to what some believe the poor people in the informal sector are actually decent human beings, responsible people who actually pay their loans.

The problem is that some see those poor guys in the informal sector as thugs, petty gamblers, with no sense of responsibility and its only time until they start defaulting, but as mentioned above most business in this sector need daily or very frequent capital, they get get that make some money with the same at the end of the day they pay the loan remain with a few coins they buy unga for the family and wait for the next day.
murchr
#20 Posted : Tuesday, January 08, 2019 1:59:56 PM
Rank: Elder


Joined: 2/26/2012
Posts: 14,883
tom_boy wrote:
murchr wrote:
tom_boy wrote:
MaichBlack wrote:
Lolest! wrote:
Angelica _ann wrote:
Gathige wrote:
tom_boy wrote:
I dont see how some people do not see mobile loans as a form of ponzi scheme. Njoroge borrows from A to repay B. Each time his loan gets bigger and bigger until eventually he will default.

I bet most people do not do any value creating work with this cash.

What % of total loans goes to mobile lending?
What % of this ends up in sport pesa et al?



The part I like about mobile money is the ease by which the meet the customers needs. You can imagine someone who needs fare to get to a work site who will be paid at the end of the day. He borrows the fare, gets back in the evening and then repays his loan and builds his credit profile. The overall interest rate may be higher than conventional rates but the ease and convenice is great.


Would you borrow from a bank if you know outright the interest rate is 50% pa, of course not. I think therein lies the risk to the greater economy since i believe it is not sustainable in the long run.

No you wouldn't but the math biz guys are doing is simple what I end up with minus what I've spent(per day).

Remember, life is very expensive in the kadogo economy

These loans have their target audience and most wazuans are not in that category. Mama mboga takes a loan in the morning buys her wares sells them by evening and repays the loan (even if it rolls over) If she borrows 2700, turn over is 5,000/= and she pays 3,000/=, she just made a cool 2,000/= she couldn't have made. Hiyo ndiyo hesabu take which makes a lot of sense!!! Come December, she decides to start selling live chicken on the side. She borrows 20,000/= at the beginning of the month, buys and sells chicken the whole month, at the end of the month she has gross of 60,000/= from chicken sales for the month she pays say 24,000/= and remains with 36,000/= she couldn't have made.

It suddenly starts raining, a hawker with no "float" quickly borrows some money, rushes to Kamukunji or wherever buys umbrellas sells most of them the same day, makes a tidy sum and repays the same day or within 30 days depending on his "business plan".

Not everything in the market is meant for everyone.


Those are great stories but is there data that this is what is actually happening? I understand borrowing a few times to cover some shortfall in a business. I dont get this mama mboga who wakes up daily to borrow money and repay in the evening. I dont get these hawker - rain scenarios occuring very often in a year. Do these people account for the billions traded daily on mobile lending? I think not.

Even if it were to be the case, what kadogo economy are we building? One dependent on exorbitant interest rates. As volumes grow, wont these high rates in themselves accelerate inflation? I am not sure that mobile loans can provide necessary break through momentum for any business. Its a loan that helps you marktime with an illusion of progress or even slowly drag you down. One default, a few bad business days and you are a defaulter, back to square 0.

Meanwhile, mobile loans deny SMEs much needed capital.


Cbk website has the data. Feel free to analyse

Kindly point me to the page with data showing how much lending is going to mobile loans as an asset class vis a vis others like agriculture, real estate etc etc

The only thing I can find is data under 2017 annual report. There is no data on loans given as mobile loans even in this report. Should mobile phone loans not be considered a different risk category worthy of tracking?


Why should they yet they are bank products like mortgages et al? From that report do you see anything alarming?
"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
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