That's the point. If you borrow 100 bob and pay 20 bob as interest, the math looks very expensive at 20%. But if the 100 bob got you fare for Mjengo kibarua and got 300 bob, the returns now become 200%. Both the cost and returns look abnormal but in Kadogo economy it's normal. If the lender was to lose even a quarter of the loans, they still have a margin to operate. Going by the number of apps in the market, the business is booming. SACCOS have also introduced MSacco where u get pesa pap, but at huge interest. They are all riding on the enabling technology and the demand.

These loans have their target audience and most wazuans are not in that category. Mama mboga takes a loan in the morning buys her wares sells them by evening and repays the loan (even if it rolls over) If she borrows 2700, turn over is 5,000/= and she pays 3,000/=, she just made a cool 2,000/= she couldn't have made. Hiyo ndiyo hesabu yake which makes a lot of sense!!! Come December, she decides to start selling live chicken on the side. She borrows 20,000/= at the beginning of the month, buys and sells chicken the whole month, at the end of the month she has gross of 60,000/= from chicken sales for the month she pays say 24,000/= and remains with 36,000/= she couldn't have made.

It suddenly starts raining, a hawker with no "float" quickly borrows some money, rushes to Kamukunji or wherever buys umbrellas sells most of them the same day, makes a tidy sum and repays the same day or within 30 days depending on his "business plan".

Not everything in the market is meant for everyone.

Those are great stories but is there data that this is what is actually happening? I understand borrowing a few times to cover some shortfall in a business. I dont get this mama mboga who wakes up daily to borrow money and repay in the evening. I dont get these hawker - rain scenarios occuring very often in a year. Do these people account for the billions traded daily on mobile lending? I think not.

Even if it were to be the case, what kadogo economy are we building? One dependent on exorbitant interest rates. As volumes grow, wont these high rates in themselves accelerate inflation? I am not sure that mobile loans can provide necessary break through momentum for any business. Its a loan that helps you marktime with an illusion of progress or even slowly drag you down. One default, a few bad business days and you are a defaulter, back to square 0.

Meanwhile, mobile loans deny SMEs much needed capital.

Banks are currently capped at 13% maximum per annum. The new lending products are their only option to earn from fees.so you can be assured that they are praying that midnight passes on the intraday loan products.

this form of credit has always existed, in the form of loan sharks - and contrary to what some believe the poor people in the informal sector are actually decent human beings, responsible people who actually pay their loans.

The problem is that some see those poor guys in the informal sector as thugs, petty gamblers, with no sense of responsibility and its only time until they start defaulting, but as mentioned above most business in this sector need daily or very frequent capital, they get get that make some money with the same at the end of the day they pay the loan remain with a few coins they buy unga for the family and wait for the next day.