Can mobile loans help break the cycle of poverty in east Africa?

Can mobile loans help break the cycle of poverty in east Africa?

Millions of people who were previously excluded from now have access to micro credit via smartphone apps.

Owning a smartphone has changed Phylista Wambua’s life. The 50-year-old mother-of-two sells fresh fruits and vegetables in downtown Nairobi. With her phone she can access mobile loans via smartphone apps, which have significantly increased her income.

“In January last year, I used to make just 800 [Kenyan] shillings a day (US$8),” Phylista tells Equal Times. “It was hardly enough to buy additional stock, never mind feed and educate my two children.”

Phylista doesn’t have a stable income so she couldn’t apply for a traditional loan from a bank, and she didn’t want to be trapped paying the extortionate interest rates charged by neighbourhood loan sharks. So when a friend told her about the micro credit offered by mobile banking apps, she knew she had nothing to lose.

“The first time I did it I took out a loan of 1,000 shillings (US$10),” she says. These days, she uses several loan apps, which charge an average interest rate of 15 per cent.

“This year alone, I have received about 50,000 shillings (US$500) from mobile loan providers,” she says, which has enabled her to buy more stock and a greater variety of produce. “I make good money, especially on kale. On a good day I now make about 4,000 shillings (US$40) if I can sell all my stock." Creating over a million new jobs

Unsecured mobile loans are helping to boost millions of micro, small and medium enterprises (MSMEs) […]

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