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Strategies & Market Trends : The Financial Collapse of 2001 Unwinding -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (4363)	2/16/2020 3:16:25 AM
From: Snowshoe	Respond to of 13794

Automated loan-sharking... Tech Startups Are Flooding Kenya With Apps Offering High-Interest Loans bloomberg.com Tala has made $1 billion in microloans to people in developing countries, all using its app. It says it can reach those who’ve been ignored by banks, because its software generates instant credit ratings from data scraped off prospective borrowers’ phones. The company is part of the financial-inclusion movement, a loose coalition of tech companies, banks, and nongovernmental organizations trying to lift people out of poverty by offering them new ways to gain access to loans and other financial services. In Kenya, the first country where digital credit has gone mainstream, borrowers are learning that with financial inclusion comes financial risk. With dozens of apps offering short-term advances similar to payday loans, word of debt’s dangers is spreading from the office towers of Nairobi to the grasslands of Maasai Mara. People who once borrowed mainly from family and friends are now being bombarded with ads for quick money and calls from debt collectors. The market is largely unregulated, and there are no caps on interest rates. Tala’s are typically 180% annualized; on some apps, they’re even higher. About 2.5 million Kenyans—1 in 10 adults—have defaulted on a digital loan. Others are trapped in a debt cycle, borrowing from one app to pay off another. Last summer newspapers reported that a 25-year-old man from a tea farming village north of Nairobi had hanged himself after defaulting on a $30 loan from an unspecified app. Pretty much everyone I meet on a visit to Kenya has a story. A print shop owner can’t pay back a loan taken out to buy a goat to cook for a Christmas party. A policeman I ask for directions pulls out his phone and admits to defaulting on a loan himself. A cab driver says that, four months after he borrowed to buy a new battery, he’s no closer to repaying the debt. Several people get text messages from debt collectors as we speak.