Shylocks leave a trail of tears, misery, shame
In William Shakespeare’s play, The Merchant of Venice, Shylock, who is a fictional character, lends money to his Christian rival Antonio, and sets security at a pound of Antonio’s flesh.
His actions are fuelled by a historical experience he had with Antonio who once insulted him. When a bankrupt Antonio goes ahead and defaults the loan, Shylock demands the pound of flesh.
However, Shylock is cornered when he is asked to ensure that as he cuts the pound of flesh, he gets the exact amount and ensures that he does not spill any blood.
The kind of greed and ruthlessness that is displayed by Shylock, who is a Jew, is the same that is being witnessed by many Kenyans who borrow money from shylocks
On the first interaction, they are friendly and will always do their best to convince you to fall into their trap but their main aim is to ensure they financially gain from you. Once you default in repayment, just like Shylock in The Merchant of Venice, they ruthlessly turn against you.
This is a fact that Judy Njeri from Juja, Kiambu county, knows all too well. On July 9, last year, Njeri was in urgent need of money and efforts to get it from close friends and relatives bore no fruit. She had no option but to get the money from a lender.
Before she could sign any document, Njeri was asked by the shylock to show him her house and place of work so that in case she defaulted he could easily locate her. Having no option as she really needed the money she did as requested.
Documents in our possession reveal how Njeri was quickly given Sh35,000 on the same day with the lender taking Sh750 disbursal fee from the amount.
On a monthly basis, Njeri parted with amounts ranging from Sh3,000 to 10,000 as she repaid the loan according to the agreement she had with the lender.
However, on October 1, 2020, Njeri was shocked when the lender told her she owed him Sh53,600 and when she tried to question why the lender turned hostile.
“I had already paid the Sh35,000 loan plus an interest of Sh13,000. This means that I parted with a total of Sh48,000.
I was shocked when he told me that I still owed him money which, he said, was penalties,” Njeri told People Daily.
According to her, when she started noticing that she had been tricked and already chained in the debt, she started avoiding the lender.
Njeri said that, days later she started being harassed by the lender who could storm her business premises with members of his staff and carry away goods.
“They really harassed me and made away with valuable goods not only from my shop but also from my house,” she narrated.
The mother of one lost everything she had and was forced to move from her one-bedroom house to a single room because of the pressure she was getting from the lender and his team.
“This is an experience that I will never forget in my life. I only hope that people can learn from my situation and avoid taking money from lenders,” she said.
Njeri’s experience aptly describes the kind of life many families and people go through when they decide to borrow money from shylocks.
In some cases, the situation is so bad that even friends part ways because of the unpaid loans due to the business which goes on with reckless abandon.
Njeri said she had not fully regained from the financial crisis that she found herself in but she hopes all will be well with time.
Two years ago, Anerlisa Muigai, the Keroche heiress, shocked the country when she was taken to court for allegedly failing to foot a Sh19.9 million debt owed to a city shylock known as Denis Mwangeka.
Ms Muigai, who maintained that she will not pay the money, narrated how she gave out two cars; a Range Rover Evoque and an Audi Q7 as collateral.
However, Mwangeka was surprised one morning when police officers and detectives attached to the Directorate of Criminal Investigations (DCI) stormed his yard and accused him of being in possession of a stolen vehicle.
His efforts to narrate what had transpired to have the vehicle in his yard never bore fruits and he finally released the car.
According to him, Ms Muigai had on September 16, 2015, taken a Sh5.5 million loan, saying she urgently needed the money to sort out a business deal.
She was given the money and she promised to repay the cash in a week with 10 per cent interest. That meant she would repay a total of Sh6.05 million.
Instead, she reached out to the shylock again and told him she needed more money and was ready to give him the Range Rover as security.
She was given an additional 4.2 million and she gave out the vehicle and promised to repay the money by September 18, 2015.
Ms Muigai according to court documents, only paid Sh346,000 and has never settled the other loan and after a while they had agreed to settle the matter out of court.
In her explanation, Ms Muigai said she was not going to repay the loans and that the interest charged was illegal and that the man she borrowed for, identified as Ben Kangangi, should settle the loan.
There has been a rise in the number of people going to shylocks for loans. Tough times as a result of the Covid-19 pandemic and the allure of quick money has sent many to the shylock dens.
However, with exorbitant interest rates of between 20 and 30 per cent, many have had to part with their property that they had put as collateral for the loans.
A Nairobi journalist learnt it the hard way when he went for a Sh60,000 quick fix. The shylock set the interest rate at 30 per cent per month meaning in 30 days he was to pay Sh78,000.
Like many others he defaulted. And with every passing day the amount would rise.
The amount rose to Sh110,000 and the shylock had to dispose of the collateral: A Subaru car valued at more than Sh500,000. The journalist lost his car for a loan that was 10 times lower than his car.
The stories of deals between clients and shylocks have in many cases ended in loss of property, court cases that drag on for long, and at times even death threats.
A search on Kenya Law, a website that is responsible for monitoring and reporting on the development of Kenya’s court cases about shylocks and money lenders, shows more than 1,500 results that involve land, car logbooks and even deals between employers and employees.
Anorld, a shylock who has been in the business for more than 10 years, says they prefer working with someone who wants a huge amount of money.
He said that this is because chances of the person defaulting are high and that is how they end up gaining from them.
“When they fail to repay that is when we get people or auctioneers to trail them and get anything valuable from them because they have engaged themselves in an agreement,” said Anorld.
According to him once they get the goods, they sell them at a profit as they target to get anything above what they had given the defaulters.
He said that at times when defaulters move to court, most of the time the cases are ruled in their favour and it is on that note that they usually strike at once but ensure they take more valuable items.
He also said that in the business, it is wise to work with police officers who are friendly to them.
“At times, some lenders go to courts that are far from their places of work and obtain orders to auction goods.
When they arrive in your home, they serve you with the order and immediately start packing your items,” he said.
Anorld said that in most cases when people are signing documents in order to get cash, they never take time to read the regulations, or the so-called fine print.
He said that most of his clients have always focused on the money and not the law that will apply until they repay the loan fully.
“They only ask how much you will require at the end of the period and leave it there.
They never take their time to read the penalties that are involved just in case they fail to honour the deal,” he said.
Chapter 23(2) of the Constitution states that no contract in writing shall be void or unenforceable by reason only that it is not under seal.
This means that the signed written agreement remains valid. When one decides to hand over their valuable item in exchange of cash from a shylock and they sign the paper that simply shows that one has entered into a contract, that’s it.
This is the law that keeps most of the shylocks surviving. People Daily has established that the law that was supposed to regulate shylock business known as the Money Lender Act was revoked in 1984 and this makes the business unregulated.
Financial expert Aly- Khan Satchu, who is the founder of investment advisory firm Rich Management, told People Daily that shylock business is simply a peer-to-peer lending which demands usurious interest rates. According to him, the Central Bank of Kenya recently placed some digital based lenders into the shylock business category.
“The issue is that typically usurious interest rates create an impossible hurdle rate and borrowers fall into a negative feedback loop from which they can never extract themselves.
Some shylocks will argue about financial inclusion but you have to ask yourself whether the price of that money is so extreme it is evidently not inclusive but finally exclusive,” Satchu said.
Asked whether there is need for a law that brings restriction to the business, Satchu said there was a need to make a distinction between official channels that can be regulated and informal unofficial channels that cannot be regulated.