Samchi Group CEO Esther Muchemi. [Source/Muchemi]
The allure of using mobile phones as a tool for accessing digital credit is laying debt traps for many Kenyans, local billionaire businesswoman Esther Muchemi has observed.
Muchemi, the founder of Samchi Group of companies, said most Kenyans were becoming 'slaves' of mobile borrowing since there were numerous digital credit providers who offer quick loans without demanding security.
The entrepreneur, who in 2000 entered into the first-ever Safaricom dealership as agent number 0001, warned people against being lured to borrow money from mobile platforms which she noted have devised crafty ways of enticing potential customers.
Narrating how she was recently tempted to borrow from M-Pesa through its 'Fuliza' service, Muchemi cautioned people to avoid the loan since it attracts "very high-interest rate and the loan is not productive as it only eat into one's wealth without creating lasting value".
"What looks like a simple activity can easily become a routine and subsequently bad habit such that when you have a shortfall you will run to quick fixes and not real solutions. Using loans to finance lifestyles and luxuries is not a good idea. Go for lon term benefit," she posted on Facebook.
The businesswoman who is also a published author outlined five factors one should consider before 'fulizaling' as people say:
"1) Ensure that you understand the cost of borrowing, interest, and other hidden costs. 2) Borrow only to create wealth and not to finance lifestyle. 3) Borrow within the budget and let the borrowing be well-thought-out. 4) Don't fall into the temptation of borrowing easy money. It's a bad habit. 5) Protect your credit rating. CRB listing may mess your future borrowing. Defend it jealously."
And to those who have already fallen to the distressing debt trap and are genuinely planning to get out of it as fast as possible, Muchemi had this to say:
"Don't borrow from one source to pay the other (teaming and lading). It is simply bad manners! Sit down and strategize on what's the best way out. It may take time but eventually, you will be happy," she said.
The multi-billion Samchi Group has four companies in the telecommunications, microfinance, hospitality and real estate industries.