 Why 254, imagine. Welkom back, this is Why 254 News and today being business Tuesday, we are asking you if you have ever borrowed from the digital lending apps or the mobile lending apps and do you know the risk involved. And tonight we have amazing guests who will be helping me discuss this issue and you can send in your feedback using our social media platform that is Y254 channel across all social media platform. The hashtag to use is Y254 Updates. Guys, thank you so much for coming to the studio today. Yes, yes, and we have Tabitha who is the financial expert. Yes, and we have Eddie, Mavijana. Yes, I'm representing the youth council. We are here to represent the Mavijana. Yes. And you know, these digital lending apps, we have over 47 of them. Yes. So, accessing money is very easy. Just tap on the mobile phone like this and you have like 2K to sort you out to go betting. Sure. And the questions you are asking tonight, why do so many youths find themselves in such a spending spree in order for which makes them push them to borrow this money. Let's start with you. Well, that would depend with a lot of things. If I'm to speak correctly, I would say it would depend with the life situation that the person is living at the moment. We youth borrow for different reasons. There are the smart reasons and then they are useless and nonsense reasons like drinking and gambling. And there are smart reasons like starting a business. So, we all borrow, but we all borrow for a purpose. I would say what would push someone to borrow, I would say it would be his current needs at that moment. But according to statistics, it says, most of the youths, most of them who are unemployed borrow for self-gratification. Kujibamba to kwenaku bet, pleasing your friends. Yes, that's something I would actually accept. It is there, there are those who are doing that. But then I get to say that like all youths are doing that, it would be really wrong and to defend the youth since I'm here to represent the youth. I would say that they are those who borrow for right reasons. Some just want to start a business and just make something out of their lives. Some want to support someone, some do it for medical reasons. There are different reasons why someone will borrow money. And for us youths, yes, we've been healed with that idea of borrowing to go and drink because most youths are unemployed. So, that's like the easiest source of money. And most of them pay students by the way. Tamizu, I don't know what your thoughts are. Well, I'm just amused as I listen to him because I agree with you, most of them are taking these loans for maybe somewhat smart reasons. But sometimes you can think through these smart reasons and you probably don't need to take a loan. For example, when you say a student needs to take a loan for whatever reason, the question then would be and how will they repay? Because every loan has to be taken smartly so that you can be able to repay it. And now this digital lending and borrowing is making it very easy because nobody knows you, nobody knows your house. So they can easily take these loans and it comes at a cost, it really comes at a cost. So I feel like the youth are feeling they have the freedom, they have the opportunity easily given to them but they are not looking at the cost, the implication and whatever comes after that. And do you think maybe this issue of youth unemployment is the main reason why our youths are spending a borrowing spree? Well, I would not say it is the main reason but it is part of the reason. Because you see if I have gone to school or even if I have not gone to school but I have an idea, I would need capital. Now for us to raise capital there has to be some form of way of raising that capital. For example, if you are employed you can be able to save and do that. Now with the high rate of unemployment it leaves a majority of them with nothing else to do. However, I still think there are other ways that we can go about this and achieve the same goal without the craze that is money lending apps. And I will tell you why I think like that. Because you see the situation we have right now Miriam is that you can borrow from more than one app. In fact you borrow, you pay from up one, then you borrow from up two to pay up one. Then you realise you are in a fix with all this and you borrow from up three to get to up two to up one. Which traditionally how borrowing and lending was happening it was not really entertaining that. But not because it is there, it is freely, they are easily gotten so unemployment is one of them. But I also think we have reached a point where there is instant gratification that we are after. So much more than unemployment it is that I like your dress or we have a road trip as girls. And I am not going to be the one to miss out. So what do I do? I am only 3000 less. So what do I do? Borrow. So unemployment had nothing to do with it. It is instant gratification at that point that was the problem. So a few things I have to be looked after. However I do agree with you that to some extent unemployment is a reason for it. I would also feel like just like many other things that are in Kenya. We were introduced to these things without proper education. There was no proper background of raising us to actually know what to do when we find ourselves in this situation. So most youths are actually borrowing and they do not know their ramifications. They do not understand anything. What they only know is this is money, I need it and it is here. Let me just get it. Let me eat all on unemployment would be unfair. There is also lack of education. Yes we go to school and rely on a lot of things but we do not learn anything about lending money. So there is no education on financial management to more youths. And on top of that the terms and conditions are too flexible that actually makes it easier. Not that most of them read it. No, you are not reading those terms and conditions. No some of them are flexible when you look at them. That's why she says it's easier for us to actually go to a lending up and borrow money. And like before the terms and conditions were way difficult and it would make it harder for us to go and borrow money. But right now they are flexible. You are being given a month and after that month they can give you an extension period. You know things like those. I feel like let me just borrow it today. I know I will make it. Yes I do think these easy access loans does it have any impact to the economy and our society right now? I believe there is a huge impact. Now some statistics show that over 6.5 million Kenyans are on digital borrowing apps. Yes. About 2 million or 1 million of them have defaulted so they are actually listed with CRB. This means this company is actually going at a loss. Now for these companies to be there in the first place they need capital. So someone pumped money into this borrowing institution so to speak and to some extent they are gambling. It's a gamble. I give you a loan. If you don't pay and you change your line who pays for that loan? So it has a trickle effect if you look at it. I think for them it's a gamble because some will pay some will not. So it's a gamble and eventually it will still affect the economy. Also when the youth, when the young people, the ones that are actually active right now do not have what he said financial literacy skills. At the end of the day it has a huge impact on the economy because then we will have a generation of a group of people that is borrowing. There is nothing to show for the borrowing. So in the end a lot of things happen. They stop borrowing. They do not have projects that run to the very end and this project needs to run to the very end for the economy to continue sustaining itself. So there is a very huge impact. So I think one of the things that needs to happen is that financial literacy skills need to be impacted to everyone and we have to take it very seriously given the situation we are in. Schools, institutions, churches and all that any kind of institution should take it very seriously because they need to pass this kind of information to people so that they know the pros and cons because it affects all of us whether we are borrowing or not. Yes, yes. It should that be the financial literacy skill can it begin from as early as primary all the way to university. I don't know what you guys think. If there was a better structure that could actually accommodate that then yes, why not? But then again when you think about it, it's bigger than that. It's just going and telling a kid that he has to go deep in the brain and he has to understand that there is more to it than just paying it back. There is the responsibility part of it. You have to understand who you are even when you are borrowing the money. It's not just amount of going to the app and borrowing money. Kikambu manafuza kuna maliza shule and all he had was student loans. Now you finish school and it's more than just student loans. Kuna student loans kuna dewa na inshuali, kuna dewa na fuliza, kuna student loan and all those they contribute to the character of the person that you become eventually because that's how you grow and that's how you'll be. Even in Kenya, this is how you'll be. You'll just be borrowing me money and using your salary to just replace that money that you've borrowed. Apuna kituna, you'll never grow. And you'll always live on debt. You'll always live on debt. So it builds the kind of person you become. So it's not just borrowing money and paying it back. It also has to influence. You have to also look at the part that how does it influence a person? How does it build you as a man or as a woman? Speaking of peer pressure and influence you want to fit in, maybe you can just tell them instead of following the peer pressure instead of being led by the peer pressure what is the other way you can do just to fit in or can just be yourself? With regards to borrowing and so money in that regard I would say that it is first important that everyone accepts the situation the way it is. That's at this point, tabi is at this point and so I can't expect to be at point D when I'm really at point A. So one of the things is to accept where you are. Number two is keep your ambitions, keep your goals but now have a strategy have a strategy of how to get to where you want to be because if I want to be at point B, C, D it means I need to move from point A to point B, C and then to get to D. So it means if I need to find a business that I need a huge capital what can I do? I can start with the small, small businesses that I can maybe sell, cook something and sell buy clothes and sell you can only do something that is within your means rather than skipping it all to get there. We also need to remember that there is a lot to learn in the process rather than skipping all the way to where you want you cannot get to the ends before going through the small. So once you accept and then you have a strategy now keep working on the strategy keep working on the plan have a plan it's also the same thing I say about borrowing at some point borrowing is good but if you do not have a plan of how these amounts or figures that you want to borrow are going to be used then borrowing becomes something else. So borrowing with a plan that you have thought through sometimes even consulted with financial consultants that is very good because it makes sure that when the amount comes there is no misuse I might be in need of address but this money was not for address. So as an expert how can we manage our finances? One of the things I think one of the things is that we need to have and develop a culture of saving. We need to develop a culture of saving it doesn't matter how much you're saving you save 10 shillings that's okay if that's all you can manage because 10 shillings in Aholia you have 3650 you can start a business you don't have to start with 10,000 in fact 3650 is enough money to go to Dekomba, buy something, sell I have bought shats at 20 shillings sell them at 50 the profit is 30 and I know probably if I was wiser I would have sold them at 100 so one of the things is save secondly have a plan have a plan, stick to the plan if you are going to deviate a little bit from the plan make sure it's something that is well thought through so if you have a plan make your plan a smart plan whereby you know this plan and so I need to step one is this step two is this consult nobody can be able to do these things by themselves because I think as youth sometimes we are guilty of thinking we can do it all so just think somehow it is necessary you work I just take it and I can actually do it better than them so once you're saving you have a plan now when you're starting to execute your plan be very careful first know that there is a chance this can work or not so that you don't keep taking more loans to boost a business that is already dying because that sometimes a reason why even we you probably had the funds to start the business but when it started going down you're like I knew this was gonna work I need another loan and you give me a loan and all of you fail I need a tala app and you just need all that so keep working on that and it's good to keep re-evaluating your goals keep re-evaluating your progress and as much as possible keep reading keep reading have the skill that you need and perfect your skill perfect your skill then have more than one thing that you can do all of us have side hustles well these days we call them side hustles but some of the things that you can do don't really require money to start for example if you say can sing you can just start by presenting yourself where people can allow you to sing in public gatherings and all that and with time you're called to sing at weddings but I think that's one of the problem in the youth today like you said respect your financial name now when the youth want to start something they don't want to start small they just want to start big like as simple as even starting a movie show he wants to have everything like it in the flat screen there and all you need is just a computer and voila you can start the business but you know you can't do more than that and it's a you you tend not to actually blame them because in all respect they won't tell you a guide like no one really guided them to actually teach them a lot all they do is like I need this and personally he can up so sing it down do it up and if he has a wife he can go home and that's all that costs me and what makes youths forget their budget you've already planned you're going to spend this amount maybe on opening day to finish maybe your hostel then all of a sudden your budget is in a rise because you've seen somewhere you've seen something so good now you want to hit him again, be a pressure just like she says you go somewhere and you don't have a shot and you don't have a shot and you don't have a shot or it's the trending thing nuggets and I have to have one like I mean when in Yamaani you have to impress and that's the only thing that can impress and you have to have it so once you start like me I agree with one thing I expect you financially and have a plan and also a plan and plan and plan so you know I used to have a friend who used to borrow money and then kuyo pesa and get up to 500 and the same I get to me 100 kilo siku kuku gamble and I was sure by the time he handed me a motion at Gonga and he told me I'm a borrow from the beginning and he paid me and after that what if doubling does it what would you do and it made he was so sad he was so sad that on the last on the last by the time I felt 500 kilo siku kuku and he was so sure like he would never so you keep on borrowing to gamble and he would borrow he would like use like maybe I'm a borrow 3000 sheniks he would remove 500 sheniks now 500 sheniks he would bet with 100 sheniks that's five bets and out of those five bets he would get the 3000 sheniks back and pay back disclaimer we are not encouraging any youths we are not encouraging any youths to gamble again that's what I'm saying gambling is not a plan it's not a plan at all at all it's actually the worst thing from a plan it's like the I would say opposite of a plan it's the downfall downfall of every plan because gambling is it's gambling there's no assualities there's no guarantees once you put your money on stake that's it it can go na inezarudi ama sa zingine na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen na inezen Google the terms and conditions, but most people don't read it. And that's where the most betting companies and the money lending apps, they gain that advantage because they know you do not know the terms and conditions. And you don't care because hizo shida zako are bigger than the terms and conditions. Una dayua rent, mule patiens chananya ya mimba. Uniza, these are just problems of the youth. Tresina takikana and you have to go and... I forgot my national expert. Mule the youth know and what is the importance of us knowing these terms and conditions? Aga na I'll give you some statistics. I told you about 6.5 million Kenyans on digital borrowing, digital borrowers, so to speak. About 3.3 million of them do not know the interest rates. Interest rates... They do not know. That means they just... There was an opportunity to take money, so I took the opportunity. It is very important to read the terms and conditions because one of the things that really drives me to be against this digital borrowing and all this is that we are selling our future. We are selling our future because as we said, we are living on debts. That means that today we are in April. In April, by the time I'm getting my salary for end of April, it's supposed to take me through May, but it's paying my debts for April. And when you have this continual cycle, it continues and it continues such that the year is 2020, you're paying debts for 2019. You will never, never now. You'll never grow. Secondly, it is that we are doing it right now because we are young. We feel we have the energy somehow we can manuva, we can manage. But once you listen at CRB, when you have a proper plan and a proper business that really indeed requires a good financial backup, you will go to a proper lending institution, say a bank or a circle or something and right there in the middle of your success plan, you'll realize you sold your future a long time ago. A long time ago when you were young. Naive. Naive. Of course you did not read the terms and conditions, but somehow you had the knowledge to download the app. So it is that we sell our future to the apps and we do not know that it will eat us up 3, 4, 5 years from now. Okay, you spoke about interest rates. Yes. The banking sector was there the day they were complaining about these crazy interest rates. So do you think these lending apps should be regulated and who will regulate them? I definitely believe and think that they should be regulated. Infact, even the banks themselves are asking that the government regulates. And this is the argument which I am for. If we are going to cap the interest rates for banks and for the banks based on what the CBK is giving, why then isn't it cutting across all lending apps? Exactly. Why is it being used? Exactly. The banks are capped, mobile or digital lending apps are not capped. So first of all, I really think that they should be capped. The other day the members of parliament asked the CBK to find a way of regulating this. Because it is important, we need to take care of our future, we need to take care of our youth. And one of the ways to do that, if they are not going to do it themselves, at least the government should do it for them by coming up with regulations that are going to ensure that even if we are going to... Because we cannot control everyone, but at least there should be ways of regulating everything so that we are all under the same umbrella as given by the CBK. So I think the CBK should regulate this mobile lending apps. And finally, because you are out of time, Eddie, do you think the digital era is affecting the youths in terms of borrowing and lending? Yes, I do. I actually do believe that it's really affecting the youth. Because it's actually making one to become mentally lazy, like seriously. Before when you had a problem and you had to find money, the first thing you think of is a job. Or going to work for someone, something that... Kibarua? Ya, kibarua. I remember when I finished high school, I used to go and clean windows. I used to work for a window cleaning company. And I would go and clean windows from 8 to 2. And I would risk my life because the areas I was claiming were so high. And then there were no insurances, there was nothing. And I would go and I would clean windows and I would wash you. And at the end of the day they would pay me and I would get paid 4,500 shillings at the end of the month. It was pretty money, but I needed it and I went for it. But you see right now, when I need something as small as 4,500 shillings, I don't have to go and work for a whole month. All I have to do is just sit down and work for a month. They are borrowing 200 shillings. So you see, it has really affected us as we grow. Because we are not growing as like mahasla wa kitambo. Like the way our parents would have wanted us, like the way they grew up. We would not grow up with a very different mentality, with a very different idea of hustling, with a very different idea of becoming the provider. Because some would just sit in the house and just wait for that to come. And they repay this loan using their parents' money? Exactly. Parents don't know what they are doing. They are paying people's loan. I want to call this parent and say, Hey mama, I need 2000 shillings. Mama say, 2000 shillings you have to wait until the end of the month. And I say thank you for that. Until the end of the month. Fuliza, me pay 2000 shillings. Mama say, I will pay 2000 shillings. Well, tell me where your final comment is. Well, I would say this. It is first good to create and cultivate a culture of saving. A culture of saving. And number two, I will say that before borrowing, it is good to have a plan. They say, chance favors are prepared in mind. In the same way, when you have an opportunity to get money, whether through borrowing or just somehow, just have a plan. Always have a plan. It makes life easier when the money comes. But when there is no plan, even if you have the money, it's how we have millionaires today and two years later they are borrowing. Well, always have a plan. According to Trabita, we are a financial expert and we also had Eddie, who was representing Mavidjana Kwaistudio. Well, that's the time we will add here. My name is Miram Asawa. Until next time, good evening and good night. And God bless you. Goodbye.