Swenani wrote:It seems most people with spare/extra money are now in shylock business? Is this biz profitable? From the 3 people I've spoken to who are in this business, they are charging a minimum of 15% PER MONTH!
How desperate are Kenyans to borrow at such unreasonable rates.
The three claim the default rates are minimal and the risk is captured in that 15%.
One of the "investors" whose clients are mainly traders charges 10% per day and the funds have to be refunded on the same day!
If this is a result of interest rate capping law, Raila should listen to Wanjiku and and advise ohuru to remove that stupid law.
Kenya's banks will never figure out how the informal sector operates. Equity almost did and made a ton of money while at it.
Let me give you a real situation.
I met a mama who sells cabbages in one of the estates in Nairobi. A truck delivers 5,000 cabbages twice a week. Her margin is between 10-15 Bob per cabbage.
She tried to borrow money to buy her own truck and the bank declined. And yet she pays over 400K for transport per month. The snobbish young bankers can't understand her business. A visit to her stall took less than 5 minutes. The young bankers couldn't stand the stench of rotten cabbages.
I advised her to talk to one of the strong shylocks. A quick look at her bank and m-pesa statement and she was ushered in to the office of the CEO/owner. They advanced her 2M. She wants to clear their money within 6 months. Cost of credit is an irrelevant factor to her.