The Nightmare of ‘Lipa Pole Pole’: Inside Kenya’s Predatory Lending Trap

Kenyans paying triple market value for phones as unregulated hire purchase schemes trap thousands in debt spiral

Hussein Kingi Juma stares at the phone in his hand with a mixture of anger and disbelief. For 365 consecutive days, he religiously paid Sh113. Every single day. Rain or shine. Sick or healthy. The HMD X2 smartphone was his lifeline to the digital economy, his connection to the world.

The final tally? A staggering Sh41,231 for a phone worth Sh17,000 in any shop along River Road. He paid nearly 2.5 times the market price.

“I regret it, but what can you do, brother? You scratch yourself where you can reach,” Juma says from his single room in Kawangware slums, the weight of his words hanging heavy in the cramped space.

Juma’s story is not unique. Across Kenya’s sprawling informal settlements and struggling middle class neighborhoods, thousands have fallen victim to what experts are now calling the most brazen consumer exploitation scheme in recent memory: the ‘lipa pole pole’ phone financing racket.

The sales pitch sounds almost philanthropic. Why pay Sh20,000 upfront when you can pay just Sh5,000 today and settle the rest at Sh50 or Sh60 a day? For a country where over 20 million people live below the poverty line, the mathematics seem to make sense. The reality, however, is a nightmare dressed in affordable daily installments.

The Software Shackles

Behind the seemingly generous payment terms lies a sinister weapon: remote locking technology. Miss a payment, and your phone transforms from a communication device into an expensive paperweight. No warning. No grace period. Just a dead screen and mounting panic.

Oscar Nkulei, a 27-year-old student at the Technical University of Kenya, knows this terror intimately. Since February, his Tecno Pop 9 has been switched off remotely “on multiple occasions” despite him making payments. The phone, valued at Sh12,000 in the market, cost him a deposit of Sh3,000 and a commitment to pay Sh60 daily for one year. Total cost: Sh27,000. More than double the market price.

“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,” Nkulei explains, his voice betraying the frustration of months spent in digital limbo.

The impact goes beyond inconvenience. Nkulei relies on his phone for online classes. When it is locked, he cannot attend lectures. His education suffers because a payment of Sh60, barely enough for a cup of tea in Nairobi, arrived a day late.

When Phones Become Prisons

For Benard Luta, the remote locks nearly proved fatal. Returning from town one evening, he reached the matatu stage to find his phone dead. Locked. Again. He had no way to pay his fare via M-Pesa.

“If it weren’t for quickly making friends with a neighbour right there, I would have been thrown out,” Luta recalls, still shaken by the memory of nearly being stranded in an unfamiliar neighborhood after dark.

His Samsung A03, worth Sh15,000, cost him Sh4,000 upfront and Sh55 daily for 18 months. He eventually paid Sh34,000 for a phone that started fading and malfunctioning within months. When he called customer service, their solution was chilling: “Go get another phone and start paying again.”

This is not hire purchase as Kenya once knew it. This is digital-age debt slavery, where the chains are coded in software and the plantation is your pocket.

Paying for Ghosts

Purity Aseo’s nightmare takes the exploitation to grotesque new levels. For over 15 months, she has been paying for a phone she no longer owns. The device was stolen more than a year ago, yet the notifications keep coming. Pay up or face loan default listing.

“I tried to inform them about the theft, but there was no response, so I continued paying thinking I might eventually stop,” says Aseo, who runs a small eatery in Gatina, Kawangware.

She deposited Sh3,000 for the phone. Now she sends money into a void, paying for a ghost device, terrified of the Credit Reference Bureau blacklisting that could lock her out of future credit forever. The company has offered no recourse, no insurance, no human decency. Just relentless payment demands for property she no longer possesses.

A Regulatory Vacuum

Economist Ken Gichiga does not mince words. “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.”

Kenya is considering significant reforms to regulate hire purchase agreements and Buy Now, Pay Later models, enhancing consumer protection and transparency. But consideration is not action. While policymakers deliberate, Kenyans are being bled dry by businesses operating in a legal grey zone.

The Hire Purchase Act, a relic from 1968, was designed for a different era. It never anticipated smartphones with kill switches or daily payment models enforced through digital surveillance. Predatory lenders encourage borrowers to refinance existing loans into bigger ones with additional fees and higher interest rates, a practice termed loan flipping. The ‘lipa pole pole’ schemes have perfected this art, trapping customers in perpetual debt cycles.

The companies claim they are democratizing smartphone access. The lipa mdogo mdogo initiative serves as a strategy to attract new customers, with smartphone penetration increasing from 53.4 percent in September 2021 to 60.9 percent as at June 2023. But at what cost? When a Sh12,000 phone costs Sh27,000, who exactly is being served?

The Privacy Predators

Legal experts are raising red flags about the privacy implications. These companies install tracking software that can remotely brick your device. They monitor your payment patterns, your usage, your digital life. A report by the Centre for Intellectual Property and Information Technology Law at Strathmore University revealed that most lending apps collect far more data than necessary.

What happens to this data? Who has access? Can it be sold? Used for profiling? The companies offer no answers. The Data Protection Act of 2019 was supposed to protect Kenyans from such invasions. Instead, the Office of the Data Protection Commissioner has been conspicuously silent on these practices.

When a private company can shut down your phone, your business, your access to financial services, your connection to emergency services at will, that is not credit provision. That is extortion with a legal veneer.

Two-Wheeled Anguish

The predatory model has metastasized beyond phones. Motorbikes, the economic lifeblood of millions of Kenyans, have become the next frontier. Young men desperate for income are signing contracts they do not understand, committing to pay Sh220 daily for two years to own a bike.

At Huduma Credit’s offices at International House last week, dozens of youth from informal settlements stormed the premises.

They had paid deposits of Sh9,500 each in August. They were promised delivery within 24 hours. More than a month later, they remain bikeless, their calls ignored, their messages unanswered.

“You go and work your sweat out there, only to come here and be cheated. These are the people who went to the streets during demonstrations because of employment, and now they are being conned,” Kevin Ongono, one of the victims, said, his voice shaking with rage.

Huduma Credit chairperson Jamal Ibrahim, also known as Jamal Rohosafi, blamed backlogs and promised delivery “by late Friday next week.”

The youths have heard such promises before. In Nairobi alone, 2,300 applications remain pending. How many have paid deposits? How much money sits in company accounts while desperate youth wait for bikes that may never come?

The Human Cost

Behind these numbers are shattered lives. John Omondi borrowed Sh50,000 from a mobile lending app, added Sh30,000 from his savings, and bought a secondhand motorcycle. Within a week, a traffic officer flagged him for a modified exhaust pipe. Panicked because he had no license or insurance, Omondi abandoned the bike and fled. It has sat rusting at Kitengela Police Station since November 2024.

“I can’t repay the loan or support my family,” says the 27-year-old Kenyatta University dropout, father to a young child. He haunts the Kitengela bus terminus daily, staring at other riders, hoping for a miracle that never comes.

The lending app still demands payment. With interest and penalties, his debt grows daily. His motorcycle, his investment, his hope, rots in a police yard.

Across Kenya, an estimated 90,000 motorcycles languish in police stations. At Kitengela alone, about 70 bikes rust away, chained together like prisoners. If each motorcycle owner paid Sh30,000 to Sh248,400 under these schemes, the total money locked up in those police yards could exceed Sh2.7 billion. Money that could have built homes, educated children, started businesses. Instead, it enriches companies while families starve.

Alex Gitari, Kajiado County Boda Boda Association Chairman, makes a shocking allegation: “Some officers buy up to five motorcycles for as little as Sh2,000 in secret auctions within police stations.” If true, this represents a systematic looting of Kenya’s most vulnerable entrepreneurs through a marriage of predatory lending and police corruption.

The Economic Carnage

The Boda Boda Safety Association of Kenya estimates a motorcycle costs about Sh180,000 in cash. Under typical hire purchase terms, that same bike requires a Sh30,000 deposit, then Sh460 daily for 18 months for a 100 to 125cc model. Total payment: Sh248,400. For a 150cc bike, the daily rate jumps to Sh580, totaling Sh331,200. Again, nearly double the cash price.

Kenya has over 2.39 million registered motorcycles. If 90,000 bikes sit idle in police stations, that represents approximately Sh45 million in lost daily earnings. Those bikes could support 360,000 people. They could generate fuel sales worth Sh300 million daily, of which Sh163 million would be taxes and levies flowing to government coffers.

Instead, the bikes rust. The riders starve. The economy hemorrhages. And the companies that sold these dreams on installment? They have already collected their money, imposed their penalties, and moved on to the next desperate customer.

A Nation of Debt Slaves

What we are witnessing is not entrepreneurship or financial inclusion. It is the systematic impoverishment of Kenya’s working class and poor under the guise of affordable credit. When a phone worth Sh17,000 costs Sh41,231, that is not a service. When a bike worth Sh180,000 costs Sh331,200, that is not opportunity. That is theft, legalized through contracts written in language borrowers do not understand, enforced through technology they cannot challenge, and enabled by a regulatory system that has abdicated its responsibility to protect citizens.

Gichiga’s call for parliamentary action is not radical. It is overdue. These businesses operate in the shadows of proper regulation, extracting wealth from those who can least afford to lose it while contributing nothing meaningful to national economic development. Their profits are private, but their costs are socialized: desperate families, mounting debt, police stations filled with abandoned property, and a generation learning that legitimate business is a fool’s game.

President William Ruto recently ordered the release of impounded motorcycles not tied to criminal investigations, calling boda boda operators “legitimate entrepreneurs whose businesses must be supported.” The gesture is welcome but insufficient. What about the money already paid? What about the punitive interest rates? What about the remote locking technology that treats paying customers like criminals?

Kenya needs emergency legislative intervention. Parliament must cap interest rates on hire purchase agreements. The law must prohibit remote locking technology except in cases of clear fraud or theft. Companies must be required to provide transparent, itemized cost breakdowns showing total payment amounts versus market values. Insurance must be mandatory and included in payment plans, not an excuse to bleed customers when devices are stolen.

The Data Protection Commissioner must investigate these tracking and remote control practices. The Competition Authority must examine whether these inflated prices constitute price fixing or market abuse. The Consumer Protection Council must finally justify its existence by taking these companies to court.

Most importantly, Kenyans must organize. Consumer rights groups, boda boda associations, and civil society must unite to demand accountability. They must document abuses, support victims in court, and name and shame companies engaged in exploitation.

The ‘lipa pole pole’ model promised to bridge the digital divide. Instead, it has become a bridge to debt slavery. The sales pitch was empowerment. The reality is imprisonment, one daily installment at a time.

Hussein Kingi Juma paid Sh41,231 for his Sh17,000 phone and considers himself lucky. He at least owns the device now. Thousands more are still paying, still trapped, still one missed payment away from being locked out of the digital economy they cannot afford to enter but cannot afford to leave.

This is not the Kenya we deserve. This is not the future we should accept. The ‘lipa pole pole’ nightmare must end before it consumes another generation of Kenyans whose only crime was daring to dream of owning a phone or a motorbike in a country that has made both dreams and survival equally expensive.