The dubious practices of digital money lenders

Digital money-lending apps unlike traditional finance institutions like banks, do not ask for expensive security against loans. Customers only upload their authentic identification documents and grant certain rights to the mobile application to access information off their mobile phones. Within minutes, they will receive money in their mobile digital wallets.

Loans received usually range from $ 10 to $ 400 and attract interest of between 10 to 20 %. Due to the loose relationship between the lender and the customer, payment and collection of these small loans is problematic.

Digital money-lending apps must employ cunning tactics to recover their money. Many clients will start getting spam messages warning them of the payment deadline and sometimes even receive abusive phone calls from call agents, especially if in default.

“The information technology department extracts call logs and contacts from clients’ phones into a central system,” an agent at one such app, says. “This information is available to us all so that whoever is working at the time can pick any phone number and harass the clients or a contact from their call log or phone book.”

Loan collection and recovery tactics are borderline harassment. The app administrators sometimes have to stalk their clients and intrude on their privacy, as well as that of their contacts. “We call and text them or their contacts endlessly. We have a ‘night train’ so they cannot even sleep in peace,” the agent adds. “I don’t like this job, but they fire us if we don’t meet a required quota of collections.” 

Claire (not her real name) woke up one day to find she had been added to a WhatsApp group titled “Fundraising for Claire to repay Best Loan,” by a money-lending app. One Henry Mugarura, an alleged Ugandan partner at two main companies running the apps Volantis and Grola Tech, opened the group.

“I wanted to die,” Claire said. “My business died. Everyone avoided me.” Mugarura sent Claire a text message saying he could ‘do worse’.

Ronald Egesa, a Ugandan human-rights activist, picked interest in the plight of clients of these easy credit apps when one of his relatives fell victim. He started an online campaign called #illegalonlineapps where he asked the public to share their experiences with digital money lenders. One hundred and twenty people responded.

The campaign has involved the Criminal Investigation Directorate (CID) to address and investigate these concerns. The success of a crackdown on errant money lenders is dependent on the cooperation of victims. Some are too ashamed to seek help. It is difficult to bring the perpetrators to account if victims remain silent.

Lindsey Kukunda is a writer, digital safety trainer and director of the civil-society organisation “Her Empire”. She lives in Kampala, Uganda.
lindseykukunda@gmail.com