How I fell prey to mobile lending apps

Wednesday March 18 2020

The ease and convenience of borrowing from mobile lending apps can lead to a vicious cycle of bad debt. PHOTO | FILE | NATION MEDIA GROUP


I am always embarrassed to share this story.

I’m embarrassed because I never pinned myself as the type of person who would fall into the trap of borrowing money from a mobile lending app.

What was more frightening than embarrassing is how quickly things went downhill. How quickly I lost the disciplined control of my borrowing and spending. How gullible I was.

I am also embarrassed because of my position here. I mean, I’m a self-acclaimed personal finance expert.

You girls come here every Saturday so we can sit across a table from each other and beat stories about how to manage our money better.

(At least that’s how I imagine it.) Yet I am here talking about managing money smarter while thumbing my phone under the table, running what feels like an under-the-table deal. I was preaching water while taking shots of vodka.


Anyway, all this began back in October 2018. I had just set up a small business and I needed working capital.

Working capital is the money needed to keep a business running – I had made sales to clients and they hadn’t yet settled their invoices.

I needed to invest in more stock and keep supplying to other clients who had ordered.

I didn’t want to pump in too much of my own money (or so I told myself) because I wanted the business to be self-sustainable. So I borrowed from a mobile lending app.

The entire process was fuss-free. They asked me fewer questions than GB would have when lending me his money. (Husbands, meh.)

I also didn’t feel the embarrassment of borrowing money. People who judge you, or you will judge yourself, apps will never judge you. Actually, I felt like I was building the nation in some profound way.


At 11 per cent, the app’s lending rate was much lower than what shylocks and sacco’s charge (between 12 and 25 per cent).

I also didn’t need to give any security – not a title deed or logbook, nor collect signatures from guarantors.

They gave me a polite warning though, that if I didn’t settle the loan by the due date, they would charge me some ridiculous rate on the outstanding amount.

The app asked me what I needed the money for, I said to ‘grow my business’. I chose to pay it back after 21 days.

Soon as I confirmed the fine print, my phone trilled with an M-Pesa message. Sh5,000. Such easy money, I thought.

I settled the loan before due date and inadvertently increased my credit score. I could access bigger loans at lower interest rates.

The second time I borrowed a little bit more but at the same rate. I used all the money for my business and paid again before due date. The convenience was oddly thrilling.


It was now January 2019 and I had been borrowing every three weeks. I could access as much as Sh15,000 at a rate of eight per cent.

One time I borrowed and used part of the money for my business and some for loose shopping – I bought beef from City Market butchery, milk from the supermarket for Muna and a pair of brown boots from those second-hand vendors on Moi Avenue. I sent what remained to my kid brother.

Then I just kept borrowing and borrowing. I mostly used the money for my personal wants, no longer for my business’ needs.

I was never broke through that Njaa-nuary stretch of tightened purse strings; the apps always lined my pockets with money.

Sometime in mid-February, I borrowed from another app to settle a pending loan with this app; then as soon as I cleared it, I borrowed a much bigger loan to carry on with and to settle the other loan from the other app. Goodness!


It was sickening. I was borrowing Peter to pay Paul. And for what? Why couldn’t I just work harder and make more money so I could break away from this vicious cycle of bad debt?

I knew my unruly habit had hit the fan when I had to withdraw money from my savings to settle the last loan I borrowed.

It was early March. That was the point I told myself, ‘Chick, this borrowing is unhealthy and endless. Tear yourself away from its viciousness.’

The writer is a certified accountant with ACCA and a former financial auditor.