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Kenya: Perpetual Debt in the Silicon Savannah
by Emma Park , Kevin P. Donovan
2 September 2019

Kenya’s poor were among the first to benefit from digital lending apps; now they call it slavery.

Across conversations in Kenya’s pubs and WhatsApp groups, debt is on everyone’s mind. The speed and ease of access to credit through new mobile apps delivers cash to millions of Kenyans in need, but many struggle to repay. Despite their small size, the loans come with a big cost—sometimes as much as 100 percent annualized. As one Nairobian told us, these apps “give you money gently, and then they come for your neck.”

He is not alone in his assessment of “fintech,” the ballooning financial technology industry that provides loans through mobile apps. During our research, we heard these emergent regimes of indebtedness called “catastrophic,” a “crisis,” and a major “social problem.” Newspapers report that mobile lending underlays a wave of domestic disarray, violence, and even suicide. One young man in Meru described it as a “can of worries.” His monthly salary was not enough to cover ordinary expenses such as rent and necessary contributions to extended kin networks—let alone leisure or investments in his own future. So, like millions of others, he turned to phone-based loans, at one point toggling between five different apps. Reeling as the costs added up, he struggled to repay, deleting the apps so he would not be tempted by repeated offers of dangerous debt.

Relations of credit and debt are nothing new to Kenya. For ages, friends, family, and colleagues have lent and borrowed from each other, but what differs today is a lack of reciprocity. In peer-to-peer credit, everyone is eventually likely to be a debtor and a creditor; terms can be reworked according to timelines and margins that are subject to negotiation. In contrast, the fintech industry envisions ordinary Kenyans as first and foremost borrowers, leading many Kenyans to describe their predicament as a form of servitude. One Kenyan argued the apps are “enslaving” people—from the working poor to the salaried classes—by making claims on their future labor.

Indeed Kenya’s new experience of debt is worrying. It reveals a novel, digitized form of slow violence that operates not so much through negotiated social relations, nor the threat of state enforcement, as through the accumulation of data, the commodification of reputation, and the instrumentalization of sociality. Kenyans are being driven into circuits of financial capital that are premised not—as the marketing would have it—on empowerment, but on the profitability of perpetual debt. The eruption of over-indebtedness in Kenya marks the intersection of a faith in finance to ameliorate the lives of the poor and a recognition by techno-capitalists that those same populations are the source of runaway profits.

It is perhaps no surprise that this confluence of technology and unregulated lending have emerged with such ferocity in Kenya. Since the early 2000s, Kenya has been touted as a hub of technological innovation from which novel financial infrastructures have emerged. Financialization through digitization is at the center of narratives of “Africa rising,” which have positioned Kenya as Africa’s “Silicon Savannah.” Both the origins and durability of this story can be largely attributed to what is now East Africa’s largest corporation, the telecommunications and financial services provider Safaricom. This corporation first drew international attention with the growth of the wildly successful and widely emulated service M-PESA, a mobile-to-mobile money transfer platform, but it has since grown far beyond this offering. Safaricom’s growth has been enabled by the Kenyan state, which proudly provides a permissive regulatory environment in the service of innovation. M-PESA, for instance, received only a “letter of no objection” from the Central Bank of Kenya that permitted—but did not regulate—the telecommunications firm’s entrance into the financial sector.


But this lending is not banking as usual. While M-Shwari is offered in conjunction with a regulated bank, huge amounts of debt are now offered in Kenya outside the purview of state regulation. Services such as Fuliza and Okoa Jahazi do not accept customer deposits and are therefore not subject to the same oversight as banks.

Those lending apps in which Safaricom is a partner are the tip of an iceberg. Dozens of other mobile lending companies now operate in Kenya, though loose regulation makes the full extent difficult to know with certainty. Speculation on their provenance and intention abounds among ordinary Kenyans; on a recent visit, we heard rumors that politicians were trying to launder money by launching lending apps, and Russians were seeking willing Kenyan partners to advise them on the contours of this new frontier market in debt. These tales point not merely to the industry’s lack of transparency but also to a sense among Kenyans that the real beneficiaries are distant and unaccountable.


Crucial to the fintech business model is an endless stream of nudges, exhortations, and incitements to borrow. Unsolicited text messages interrupt people throughout the day, enticing those in need to borrow at extraordinary rates. Many pointed to the high rates of borrowing on weekend nights as evidence that loans are marketed and taken in moments of inebriated revelry.

Those at risk of default receive just as much hectoring (one study found 50 percent of Kenyans repaid a loan late). A University of Nairobi graduate told us how embarrassing it is to be in a meeting—or worse, a job interview—and have repayment reminders pop up on your screen. “It’s so embarrassing! They text all the time. You get stressed.” Another of these apps, Okash, took this logic of stigmatization even further, harvesting users’ contacts and calling bosses, parents, and friends to shame defaulters into repaying.


This capacity to escape jurisdiction marks a rupture in the business of debt. While traditional banks secure their lending with a combination of customer deposits and pledged collateral, digital lenders such as Safaricom forego these. Instead, through the assembly of a vast archive of user data, the firm claims it can analyze behavior in a predictive fashion, premising loans not on property—whether deposits or collateral—but on quantitative assessments of credit worthiness.


It is also a cycle of indebtedness which the lenders have little incentive to break. While borrowers scramble to repay, fintech firms have structured the market to benefit from iterative borrowing. Each time a loan is taken out, more user data is harvested, allowing companies to develop better predictions on the rates of repayment of a given customer. Timely repayment grants a user access to loans of higher values, but the fixed percentage facilitation fee means the profit only proportionally increases. In other words, the greater the use of the service, the higher the returns to the corporations.


Expanding access to bank credit has long been a goal of international organizations, government, and industry, united by the goal of “financial inclusion,” or “banking the unbanked.” This agenda valorizes the role of markets to improve people’s lives—an ideology buoyed by the conservative turn in places such as the U.K.’s Department for International Development and the outsized influence of the Gates Foundation.

Our research shows, however, that people targeted by fintech are not simply unbanked: many are regularly broke. More specifically, the profitability of digital debt depends on the routine shortage of cash among Kenyans. While some are using credit to invest in businesses, many consumers of easy credit turn to lenders when unable to pay a bill, make rent, or even afford charcoal to cook an evening meal. Such a predicament is not merely the reserve of the especially poor; the need to buy time with expensive loans unites Kenyans up and down the class ladder. More than a third of digital debtors are using the loans to meet day-to-day household needs—the type of routine expenses that are unlikely to disappear with borrowing.

Across the country, millions of Kenyans work in a condition that Michael Denning has referred to as “wageless life.” Whether hawking mitumba (used clothing) along Kenya’s streets, working in the privatized transport sector, or operating as a mama mboga (vegetable seller) in Kenya’s markets, people in this labor market make money on the day. But their fiscal horizons are unpredictable and subject to volatility. Instead of selling their labor power in exchange for a wage, these men and women toil in what more closely approximates a piece-work regime, making a small margin every time the negotiation for a piece of clothing is finalized, a vehicle is boarded, or a bag of potatoes is sold.


Kenya’s salaried workers too, are part of the zero-balance economy. While a salary surely reduces economic precarity, it is not enough for most employed people. Recent figures from the Kenya National Bureau of Statistics indicate that three-quarters of salaried workers (nearly 2 million people) make less than KSh 50,000 a month (roughly 485 U.S. dollars) . People tend to get paid towards the end of the month, and they use much of their salaries to pay their rent by the first of the following month. Furthermore, the whittling away of public services—what one economist we spoke to called “internally-imposed structural adjustment”—means increasing costs for individuals, who spend their hard-earned shillings to, for example, pay water and electricity bills, and school and medical fees. By the middle of the month, bank accounts are dwindling and wallets thin. There is a sort of respiration across the Kenyan economy that reflects the monthly flow of zero balance life: from the crowds at bars waning to the increased reliance on the familiar, inexpensive Kenyan dish sukuma wiki (literally, to push the week). We were routinely directed to look to the roads: by mid-month, Kenyans are less beleaguered by “the jam”—the national shorthand for traffic—because many can no longer afford gas for their cars and commute via bus instead.


Kenya’s indebted class is united by its inclusion in the zero-balance economy.

The obstacles to getting relief to Kenyan borrowers go beyond regulatory policy. Regulators, donors, and industry share an underlying assumption that individuals get into trouble with debt because they are confused or imprudent. Financial inclusion advocates and venture capitalists only see people as borrowers or entrepreneurs. Yet, the shared predicaments of so many Kenyans are better understood in terms of the emergence of a new class. Kenya’s indebted class is united by its inclusion in the zero-balance economy: whether working as a hawker who cannot accumulate sufficient stock or an employee whose salary is not enough to last the month, the irregularity and paucity of income in Kenya compels borrowing. With rent coming due, school fees on the horizon, and relatives asking for help with medical costs, digital loans are not taken for lack of information or awareness; rather, Kenyans must borrow to make ends meet. Their constraints on social reproduction cannot be solved by appeals to liberal aspirations for informed consent. Their indebted status is not a sign of empowerment; it is evidence of their subordination to economic arrangements not of their choosing.

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Source: Boston Review

Emma Park

is an Assistant Professor of History at the New School for Social Research and Eugene Lang College, where she teaches courses on modern Africa, science and technology, global histories of capitalism, and the history of “development.”

Kevin P. Donovan

is a Lecturer in the Centre of African Studies at the University of Edinburgh. He received his Ph.D. at the University of Michigan, in the program in Anthropology & History.