David Ndii: Stawi Banking, Another One From The Kenyatta’s On State Capture

President Uhuru Kenyatta today officially launch STAWI – a mobile loan product geared towards SMEs and Kenyan economist David Ndii has a lot to say about it.

In an article titled Crony Capitalism and State Capture 2: Documents Reveal the Kenyatta Family’s Plans to Take over Lending to SMEs Ndii had predicted that Uhuru would attempt to take over Lending to SMEs and Stawi is just but the beginning. Ndii claims the product is just but another gimmick that the Kenyatta family is using to grow the Uhuru Dynasty.

Ndii says the product, which was created in February as ‘Wezesha’ was to ride on  Huduma namba data to profile borrowers. It was also to use the integrated network of Huduma Centres for marketing and registration purposes.

Interestingly, the only thing that has changed is the scheme name from Wezesha to Stawi.

Everything Ndii had said has since come to pass, Today led by President Uhuru, the Kenya banking sector, under the ambit of the Kenya Bankers Association, has unveiled a credit platform for Small and Medium-sized Enterprises (SMEs). The platform, christened Stawi, is an unsecured digital credit scheme which is meant to improve access to credit for MSMEs, through offering unsecured loans from between KSh30,000 to KSh250,000 with repayment periods of 1 month to 12 months, at an interest rate of nine percent per year.

“The platform will offer micro and small enterprises an overdraft facility of up to KSh 50,000, and a loan of up to 12 months with a limit of KSh 200,000.” Ndii had written.

The new product will be managed by NCBA, Co-operative Bank, Diamond Trust Bank (DTB), and KCB. (Since, CBA, owned by the Kenyatta family, has acquired NIC Bank and rebranded to NCBA bank)

“It will be managed by five banks, namely NIC Bank, Diamond Trust Bank (DTB), the Kenya Commercial Bank and Cooperative Bank under the leadership of the Kenyatta Family-owned Commercial Bank of Africa.” Ndii wrote.

“Why is the government using public funds and resources to subsidise and market a credit product meant to exploit Kenyans? The Stawi product will give undue competition to other products in the market,” Ndii asks.

“When compared with other mobile-based loans, you will recognize that the Stawi product is very competitively priced; in fact, Stawi is the lowest cost mobile loan for SMEs which will make it instrumental in making credit accessible to millions of business owners and youth entrepreneurs across the country,” Kenya Bankers Association (KBA) chairman Joshua Oigara said.

Stawi will charge the cheapest interest rates at an interest rate of 9 pc. David Ndii writes that the 9pc percent interest is bait. Its purpose is to make the case for the proposed government credit insurance scheme by purporting to offer SMEs affordable credit.

Ndii claims Wezesha (Stawi) is a strategy to finance undercutting the competition by pricing below cost at entry, with the intention of charging monopoly prices once the competition is driven out of business. In competition economics, this is called predatory pricing, which is illegal under competition law.

“This Scheme is designed to make the CBA the gatekeeper for the entire banking and financial services to micro-and small enterprises, and I quote: “CBA Digital shall play a lead arranger role to develop and operate the credit risk management model for the full credit lifecycle.”,” He adds.