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According to the International Association for Mobile Network Operators, there is a growing prevalence of app-based borrowing with nearly four in ten Kenyans having used mobile money apps to get a loan. In 2021, 36 percent of Kenyans acquired loans through their mobile phones with popular lending apps being Mshwari, Tala, Fuliza, Branch, KCB M-Pesa, and Zenka.

Research conducted by Tala dubbed the state of the economy, found that the tough economic conditions have forced 50 percent of Kenyans to borrow from lending apps to meet their basic needs.  The research also found that 67 percent of the respondents indicated taking out loans to finance stock.

With the increased cost of living, Kenyans are straining to keep up and have turned to digital loans for survival. According to the Credit Reference Bureau of Kenya Limited, more than half a million Kenyans have been blacklisted and the number keeps growing as more digital lending platforms enter the East African region. The Central Bank of Kenya (CBK) revealed that, as of November 2022, about 14 million accounts had been listed for defaulting on digital lending apps.

Four years ago, a 25-year-old gentleman in Murang’a committed suicide after receiving a text message about being blacklisted from receiving future credit due to failure of repaying a KShs.3000 mobile loan. His story is not new as many Kenyans are sinking into debt and depression through easy access to mobile loans.

Currently, there are more than 50 mobile and online credit providers offering loans at a click of a button. However, this comes at a cost as most of these lending apps charge as high as 150 percent interest rate a year. These apps are being developed every day due to the large appetite for loans by Kenyans. But for us to achieve financial security and ensure we don’t need mobile loans, Kenyans need to find ways to manage finances and avoid mobile apps.

The first step is deleting the mobile apps from your phone and unsubscribing from receiving notifications from lenders. This reduces the urge of wanting to borrow and makes it a habit of ignoring text messages from the apps.

The next step is financial literacy. Financial literacy enhances you with the skills needed to make money work for you. It is through financial literacy that one can know different platforms to save money, control one’s spending, and live within your means.

Insurance has saving and investment tools that help one achieve their financial goal as well as ensure you have readily available funds. Money market funds are one of the most ideal funds for Kenyans to start their saving journey. They are low-risk funds that ensure your money is safe and one can withdraw whenever they have an emergency. The CIC money market fund allows you to make an initial investment of KShs.5,000 and a monthly top-up of KShs.1,000.

It is an individual responsibility to ensure that we achieve financial security for the sake of our futures. Self-control, discipline, budgeting, and living with our means, is the sure way of ensuring these apps do not entice us. As players in the financial sector, we must offer financial literacy on financial planning and create awareness of the different tools one can use to save.

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