Inside the world of the Kenyan shylock


Were it not for the ‘INSTANT CASH ON ITEMS’ sign in bold red hanging by the doorway, Terry’s shylock stall would pass for a regular electronics shop. Her business is registered as a shop because she hasn’t met the legal standards required to call it a microfinance institution.

In sharp contrast to banks and other lending institutions, there is no steel and glass, neither is there a leather couch or a coffee vending machine here. The shop is on the ground floor of a building along Ronald Ngala Street in Nairobi, sandwiched between a movie shop and an informal library. Its walls are lined with shelves carrying TV sets and microwaves. At the entrance there is a glass display holding rows of mobile phones.

Were it not for the ‘INSTANT CASH ON ITEMS’ sign in bold red hanging by the doorway, Terry’s shylock stall would pass for a regular electronics shop. PHOTO| FILE

Terry, who owns this stall, is a middle-aged woman. She stumbled into the shylock business 10 years ago after failing at a number of other businesses. Today she’s wearing a purple top, chunky cornrows and an easy smile. She doesn’t look like you’d imagine  a loan shark would – which, to most, is cunning, tough and maybe a little streak of violent running underneath the motherly exterior.

Loan processing here is instant. As long as you have collateral in the form of either a household item, a phone, a log book or a title deed, she will give you money. Her interest rate is 30 per cent for new clients and she gives you 30 days to pay back the money. If you don’t, she assumes ownership of the item that you left with her.

“The valuables are my security, although sometimes they turn out to be my biggest business hurdle. Sometimes someone will bring a stolen item and take whatever you offer them. Other times, a client will give me a faulty electronic gadget and then willingly default on paying back. You only find this fault when you try to sell the item,” she says.

When the Central Bank of Kenya capped the loan interest rates at 14 per cent two months ago, it was expected that banks would become an extremely popular port of call for clients seeking loans. In fact, these financial institutions have recorded a surge in the number of personal loans applications in the two months, but Terry tells me that for her, it has been business as usual. “Shylocks are still in demand,” she says.

A client walks in during this interview. She is a woman in her 30s carrying a laptop. She has an emergency and needs Sh8,000. Terry doesn’t ask the details of her emergency and the client doesn’t offer them. After a few minutes of haggling during which Terry repeatedly tells the woman how worthless the laptop is, they finally agree on a sixth of its value, Sh5,000. Terry hands her a two-page contract which she hurriedly fills in and signs, then leaves with the money  in her purse, visibly relieved.

In the recent past, telcos and banks have come up with various products to meet the needs of those seeking small personal loans. There are now products such as Safaricom’s M-shwari, Equity’s Equitel and KCB’s M-pesa service which allow individuals to borrow instantly through their phones. Compared to the moneylenders, they have much lower interest rates of between 4 and 12 per cent. They also allow a period of between 30 and 180 days for loan repayment.

Loans from the regulated financial institutions have become cheaper and more accessible but still, loan sharks thrive. One wonders why.


“To borrow anywhere else, even on mobile money platforms, you need to have been saving for a while. You need to have built a good credit history,” says 33-year-old Flora Kitui.

In January last year, Flora, who is gainfully employed, saw a business opportunity in buying and reselling things from China. She already had a loan at her SACCO and her payslip was not good enough to get her a bank loan so she went to a shylock for the Sh150,000 she needed as capital.

“Unfortunately, the man I had contracted to buy the stock for me went under with the money. I was paying 15 per cent monthly interest on the total amount. In six months, I ended up paying double in interest,” she says. In retrospect, she says that her mistake wasn’t that she borrowed from a shylock but that she borrowed for a start-up which would take a while to pick up.

“Shylocks give you that instant fix. You aren’t asked for security or guarantors. I borrowed again for another project this year and it is going well. I think that because of the ease of it, borrowing becomes addictive.”

Loan sharks also do not ask questions regarding your borrowing history, meaning that the defaulters and those who have been listed by the CRB find a safe haven with them.

Then there are those who are seeking to hide because of the shame of borrowing. Sharon, a mother of two, lost her rent money after using it to place a sports bet earlier this year.

“I am a member of a SACCO but I needed at least two days’ approval as well as guarantors whom I didn’t have. I went to a lady in the neighbourhood who lends from her house at 20 per cent interest and I paid the rent. My husband never found out about it and I had a month to put the money together silently,” she says.


Seeing as the transactions are quick and the requirements minimal, the money lenders might seem like the perfect solution for those seeking a quick fix. Their customers agree that they are a working solution… as long as you do not default on your loan.

“We give such high interest rates because shylocking is a high-risk business,” Grace Cherotich, a 31-year-old money lender, explains.

Grace is in a chama with nine other women where they contribute Sh8,000 every month. Two years ago they decided to start lending out their savings at a 15 per cent monthly interest instead of just having it lying around in their bank account.

“Money lending is a booming business. Since we started two years ago, our capital of Sh200,000 has doubled. We get calls almost on a daily basis from people needing urgent cash. Their needs are varied. We have men seeking to maintain their wives’ expensive lifestyles, individuals seeking to make car clearances at the port and others seeking to start side hustles,” she says.

Their group doesn’t ask for any form of security from clients. Their transactions are based on trust, gentleman’s agreements.

“We have lost a lot of money. When someone defaults, there is nothing we can do about it. We usually just write it off as bad debt. People seeking to maintain certain lifestyles using debt are the ones who default most frequently,” she says.

To curb this, they stopped lending out sums above Sh50,000. However because they have quite the capital base, the group has managed to stay afloat and even make large profits even after losing money. There are those who can’t.

“I can’t afford to just write off those who default as just bad debts. My business would die,” says Mukami Kinyua, another moneylender whose business is smaller and more informal.

Forty-year-old Mukami lends money to friends and neighbours from her living room in Umoja, Nairobi. While most of her clients pay their loans on time, there are those who default. The business is not registered and she doesn’t pay taxes for it so the law can’t protect her. She has sought other ways to protect herself.

“I have been doing this for seven years. I have made friends with policemen over the years who help me scare defaulting clients for a little money. It is funny how someone will swear that they can’t pay back a loan but the minute they see law enforcement, the money somehow surfaces,” she says.



  •  Before signing on the dotted line and taking off with your receipt, always read the fine print.
  •  A shylock might not be the best source of capital for a start-up. A business needs time to get a sufficient cash flow to be able to make repayments which a shylock will not give.
  •  Be careful about borrowing to maintain your lifestyle.
  •  Borrowing, especially as easy as it is with shylocks, is addictive.