Kenya’s Indebted Class
Safaricom Centre in Nairobi, 2014. Photograph via Wikimedia Commons (cc)
From Boston Review:
So worrying are the trends in Kenya that even proponents of digital lending are calling for caution. The Central Bank of Kenya has demanded borrowers are made aware of the apps’ terms and conditions, but at present a legislative mandate does not exist that would require much more than disclosure by non-bank lenders. Donors, including the groups that have done the most to valorize digital finance, are beginning to advocate similar consumer protections, from transparency requirements to rules around reckless lending. A group of fintech lenders have tried to head off official regulations by signing a voluntary code of conduct and forming a lobbying group. Promising not to lend more than 40 U.S. dollars to first-time borrowers, or to clearly present the terms of a loan, may help around the margins, but commercial self-regulation will not transform the profiteering of globally ambitious venture capitalists.
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.