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The 'lipa pole pole' model is shaping up to be the next major consumer protection battle in Kenya.
The sales pitch is often too tempting. It comes with suggestions like: “Why buy a phone for Sh20,000 when you can pay just Sh5,000 and settle the rest slowly?”
The instalment options are usually for daily or weekly payments and temptingly low on paper. Tell a Kenyan that they can pay something like Sh50 a day to eventually own the phone after 12 months, and some will take it.
Some have been tempted.
However, there is a catch. That phone has software designed to lock it if you are late with your instalments. It literally turns your phone into a dead solid with little assistance to you until you pay up. After the customer pays the due instalment, sometimes using another person’s phone, it lights up again.
Through that arrangement, Kenyans have been forced to borrow urgently to enable them to access their devices again. Some have had to miss important activities or go offline against their will.
That is not the only catch. There is also the small matter of ending up paying more than two times the market value of the product. It is the good old hire purchase, but on a new dimension and with a tech edge.
Customers are being forced to pay two or three times the market price for smartphones.
The demand for phones, and particularly smartphones, has risen sharply in recent years. Beyond communication, phones have become essential tools of modern life. They are where financial transactions are made, directions sought, and entertainment streamed on the go.
But amid the rising demand lies one major hurdle: affordability. Most decent smartphones range between Sh13,000 and Sh30,000 in a country where over 20 million people live below the poverty line.
Oscar Nkulei, a student at the Technical University of Kenya, says he first heard about the hire purchase model from a friend in February. Shortly after, he walked into a Kitui shop. After paying a deposit of Sh3,000, he walked out with a Tecno Pop 9, a phone valued at Sh12,000 in the market, and agreed to pay the balance in daily instalments.
“The instructions I was given were that I would pay for this phone over one year, and that every day I would pay Sh60. They told me the total cost was Sh27,000, and I hadn’t done any research to know how much it costs in the market…I told them it was okay, but I was surprised when they said that if the year ends and I haven’t finished paying, they will come for the phone, and they won’t give it back to me,” says Nkulei.
Since February, he says, life has been nothing short of a nightmare. Despite relying on the phone to study, it has been switched off remotely on multiple occasions due to delays in payments, sometimes even when he has already paid.
“It becomes difficult for me because I can’t access the apps that are on the phone. Most of the time, when someone calls, they might think I’ve blocked them because they find the line busy. And if I pay Sh60per day, yet a parent has sent only Sh200, I’m expected to pay for three days so that I can attend online classes consistently, and that doesn’t even include the cost of buying data. Also, if I miss paying for two days, they say I must pay for a full week, and it becomes a problem to pay,” he added.
A mobile phone user scrolling through messages on messaging app WhatsApp.
Benard Luta also bought a “lipa pole pole” phone, and the sudden locks for not paying nearly turned fatal one day.
“I was coming from town, and when it was time to pay [fare], I found my phone was off. If it weren’t for quickly making friends with a neighbour right there, I would have been thrown out,” he says.
Luta had purchased a Samsung A03, valued at Sh15,000, after depositing Sh4,000, and committing to pay Sh55 daily for 18 months.
He eventually paid Sh34,000, more than double the market price for a phone he says wasn’t worth the cost.
“When you look at the screen, it has faded. And when you call them, they tell you to go get another phone and start paying again,” he lamented.
In the slums of Kawangware, Hussein Kingi Juma says it has been a torturous 12 months with a phone bought on hire purchase. Just like Oscar and Luta, he endured abrupt locks that left him “mteja” for long stretches.
“If you don’t pay, you have no communication,” said Juma as he held the phone. “It’s as if you remain just a customer. Yes, you have the phone, but you can’t receive anything.”
Looking back, Juma is baffled that he ended up paying for his HMD X2 valued at Sh17, 000 nearly three times more than the actual market price. Having deposited Sh4,200, he religiously paid Sh113 each day for 365 days before finally owning the phone.
“I paid about Sh41,231 for this phone, yet if you go to the shop, it’s actually Sh17,000 phone… I regret it, but what can you do, brother? You scratch yourself where you can reach,” he said.
The situation is even worse for Purity Aseo, who runs a small eatery in Gatina, Kawangware. She has been paying for a phone she no longer owns after it was stolen more than 15 months ago.
“There were these people advertising phones. One of them asked me about a phone on loan. I took it and paid a deposit of Sh3,000, but after a few months it was stolen, yet I’m still paying for it. I keep paying because I receive notifications, and I’m afraid of being listed for a loan default. I tried to inform them about the theft, but there was no response, so I continued paying thinking I might eventually stop,” she said.
All four individuals paid two to three times the market price, raising serious concerns about buyer exploitation by phone and credit companies.
There is a need to prioritise data management infrastructure for privacy and data protection.
Legal experts are also questioning the privacy and data protection implications of these models and whether it is lawful for companies to remotely lock or deactivate phones for minor payment delays.
Mr Ken Gichiga, an economist, says the practice is unethical. However, he notes, such businesses are thriving in the country due to a lack of regulations.
“They…engage in exploitative practices that oppress people. You find that these businesses operate without regulations and therefore do not contribute to the nation’s economy,” said Mr Gichiga.
He has proposed that Parliament should enact laws that would help reduce such exploitation in these businesses.
“You find someone working hard, only for their money to go towards repaying a loan that has no economic benefit to the nation. Others end up suffering from stress,” he said.
Meanwhile, Nairobi youth from informal settlements are up in arms after a delay in getting motorbikes for which they had paid deposits under a hire purchase model. They said that since August, they had been led astray by the Spiro motorbike dealer, who is also the chairperson of Huduma Credit.
The youths, who stormed the Huduma Credit offices at International House on Thursday, said that the dealer had assured them that they would receive their motorbikes within 24 hours of paying a deposit of Sh9,500.
However, they ended up waiting for more than a month. As they waited, they claimed their calls and messages went unanswered. They accused some agents of giving them false hope.
Abdirizak Hassan said that the motorbike he was supposed to pay for at a rate of Sh220 per day for two years has been delayed, with no information from the management.
“They have not given us motorbikes and they are continuing to receive money from other youths. We only want motorbikes. We have all the agreements with them but see what they are doing to us now. We are being ignored,” Mr Hassan said.
Kevin Ongono, who paid his deposit on September 5, said that the youths were being exploited by the dealer.
“You go and work your sweat out there, only to come here and be cheated. Let them give these youths their demands. These are the people who went to the streets during demonstrations because of employment, and now they are being conned,” Mr Ongono said.
Huduma Credit chairperson Jamal Ibrahim, also known as Jamal Rohosafi, said that the delay was prompted by backlogs of applications experienced across the country.
Mr Ibrahim said that the concerns were genuine, assuring them that the supplier would clear all the pending applications within the next week. He also announced that they had suspended new applications to process the existing ones.
“What we were expecting last week is that the cargo would be cleared. We have our manufacturing company in Syokimau and they told us that they received the cargo this [Thursday] morning. Due to the long process of production, we want to announce that we will start clearing Nairobi applications by late Friday next week,” Mr Ibrahim said.
He said that in Nairobi alone, they had received 2,300 applications from people who want such motorbikes.
“The backlog is not only here in Nairobi but also in Western and Mombasa. I can promise our clients that we will work together hand-in-hand until we finish this business.”
