Shylocks have taken advantage of inaccessibility of bank loans to strip many Kenyans of their prime assets, mainly matrimonial homes and cars.
Documents filed in court reveal a shocking trend where money lenders move in to auction hapless borrowers’ property after slapping them with huge default penalties as high as five times the borrowed amount. Digital mobile apps and micro-lenders are at the forefront of expanding the Shylock economy. The lenders are thriving by advancing huge sums of money based on collateral that they dispose of at the slightest hint of default.
One such lender, Mwananchi Credit Limited, is fighting off multiple suits by clients who accuse the firm of seeking to dispose of their property after loading high interest and penalty charges that put repayment out of their reach.
A borrower, George Washington Mallan Omondi, is fighting to stop Mwananchi Credit Limited from disposing of his Lavington home after he defaulted on repaying Sh6.5 million borrowed in May last year.
Mr Omondi is shocked that the loan accrued Sh14 million interest by March this year. He says the lender is seeking to dispose of his house, valued at Sh200 million, at a throwaway price.
“The defendants… be restrained from selling, offering for sale, advertising for sale or in any way dealing with the property pending the hearing and determination of the suit,” reads one of the orders he is seeking in the court document. Mr Omondi says he borrowed Sh8.9 million to be repaid in six months but received only Sh6.5 million and was told the difference covers interest.
But the firm’s director, Dennis Mwombo, in his response says that the terms were well explained to Mr Omondi. This is just one of the many suits the firm is fighting off. Wilfred Omondi Opiyo borrowed Sh2 million to be repaid in three months with interest of Sh661,998. He used his property in Kajiado as collateral.
He says he repaid two instalments but due to financial difficulties defaulted on the third.
Mwananchi Credit Limited moved to sell his property to recover Sh4.2 million, which it said was the outstanding amount.