A ‘gang’ of shylocks invade the city

By CCI TeamA month ago, Grace, a second-hand clothes trader in Nairobi’s Eastlands, was an anxious woman. Her business, which is her only source of livelihood, was falling apart yet she had no cash to salvage it.Her stock, comprising mostly of faded clothes, could not entice customers. Several days had passed without her selling anything. Hunger and starvation stared her family on the face. However, as she was about to resign to her fate, help came knocking.A friend told her she knew someone who could loan her money to kick-start her business. "She gave me a phone number of a man who she said would promptly lend me money at a small interest rate," recalls Grace.Household items left as security by borrowers at one of the shylock’s premises at Kayole Estate, Nairobi. The two talked about details of the loan on phone and he agreed to advance her the money. Grace was dumbfounded when the man brought her Sh10,000 at her workplace. "He told me I would pay him a fixed 40 per cent interest," she recalls.Soon, her business was back on track. Nonetheless, when she started to repay the loan, Grace realised she had been swindled. "He told me that I was to pay interest every month until I refunded the principal amount in total," she says. It became an arduous task and she defaulted.The man called and warned her of dire consequences. One evening, a group of scruffy men stormed her home and carried her household items saying they would sell them to offset the balance of the loan.They warned her of reprisal if she dared report the matter to the police. To date, she has not reported the matter and she forfeited her property in fear. Grace is a victim of shylocking syndicates that are targeting business people and individuals in many parts of Nairobi. Among the estates mostly affected in Eastlands are Umoja, Donholm, Kayole, Komarock and Dandora. Others include Kariobangi, Githurai, Mathare, Kasarani, Gikomba Market and City Stadium market.Exorbitant interestThe shylocks lend money at an exorbitant interest rate of between 10 and 50 per cent. Interestingly, one’s urgency and desperation determines whether the shylock fixes the interest per day, week or month.The amount loaned ranges from Sh1,000 to as high as Sh200,000, CCI established. Curiously, the deals do not involve any written agreement. "You meet anywhere. At a bus terminus, on the road or they come to your business premises. They will give you the money and walk away," says Grace. Household goods held by a shylock as security in case borrowers fail to repay loans advanced to them. Photos/ Jenniffer Wachie And File/Standard"For little amounts like Sh1,000, they will send you through Mpesa," she adds. Once one receives the money, they will pay interest for as long as they have not refunded the principal amount.For instance, if one borrows Sh1,000 at an interest rate of 10 per cent per day, they will pay Sh100 each day until they clear the principal amount. The longer one takes, the merrier it is for the shylocks."They do not give you a fixed timeline to pay the loan. In fact, they will encourage you to stay with the money so that they reap maximum benefits,’’ says Wairimu, another victim who borrowed Sh20,000 which she is struggling to repay.Trouble begins when one defaults in payments. "The person who loaned you the money will demand for the whole amount," Wairimu says. "If you fail to comply, they then inform you that you will henceforth deal with the jeshi (a gang)," That disclosure makes one realise that they are not dealing with an individual but an organised criminal gang. About five men will visit the victim’s house or business premises and carry property. She says they suspect the syndicate is led by Mungiki. "Some come at night. They indiscriminately pick anything they want from your house," reveals Wairimu who was threatened when she defaulted. "You cannot go to the police because they will not protect you. It is better to lose your property than losing your life," she adds saying many victims are suffering in silence."I have no information that there are such rackets in this area. No one has reported that they are victims of shylocking gangs," says Kayole OCPD, Mr Moses Lubisia. "Extortion is an offence. Victims should report to any police station to enable us fight such crimes."Extreme fearHe says that the biggest hindrance to fighting crime is people’s fear of criminals. "When people fail to report to the police, they entrench and authenticate such activities," he says.Kasarani OCPD Mr Joseph Wambua too says that he has not received any complaints from victims of loan sharks. "No one has reported to my office of such crimes," he says.Investigations by CCI have revealed that the shylocks have an elaborate network consisting of agents in several estates in Nairobi.The agents run genuine and established enterprises like estate supermarkets, transport businesses and wholesale shops. These are the people who give the money and authorise for any money to be loaned. In the course of our investigations, CCI called a Mr Mungai one of the agents based in Umoja Estate and asked for a loan. He asked to know where the caller works. When this writer informed him that he sells clothes at Gikomba Market, he gave him a number of a certain Mr Ng’ang’a who is stationed at the market.When he called Ng’ang’a, he admitted that they offer credit facilities. "Since you want to borrow from us for the first time, we shall need security. We only accept radios, gas cylinders and televisions?" he elaborated upon further enquiry.He then insisted to visit the caller’s home and business premises before he could offer the Sh15,000 loan. Their loans, he said, attract 30 per cent monthly interest. However, he added, one can also take hourly, daily or weekly loans. In some estates, the money-lending gangs have established offices to hoodwink people that theirs are legal businesses. Such an office is at Kayole Estate operating as a cooperative, savings and credit limited. Such organisations mainly lend money to people at a highly inflated interest."When you go there, you are given refreshments and enticed to take a loan," says a source who asked not to be identified. "Reality dawns when you default on payment. A gang of youth will storm your business premises and carry anything they wish," he adds.Lubisia denies knowledge of the existence of the office operating as a savings and Credit limited . However, he blames the whole menace on members of the public. "Why should people go to shylocks when we have banks which offer loans at a fixed interest rates?" he pauses.Mr Mung’era, a shylock who has been in the business for over four years in Kayole, says that people shy away from banks because of stringent conditions.Lucrative business"Before they give their loans, banks have long procedures which discourage many people," he says. "Most of those I lend money to want to clear their bank loans while the majority want to boost their businesses. But others have financial emergencies," he adds.He confesses that shylocking is a lucrative business. "I have made a lot of profits from the trade but equally lost a lot of money," he says. Police spokesperson Mr Eric Kiraithe admits that police have received several reports about the usury menace in Nairobi. "Those businesses are illegal, whether they are conducted by individuals or criminal gangs," he says. "We know they get abnormal profits. They are not licensed and they do not remit tax to the Kenya Revenue Authority," he adds.He says it is difficult to eradicate the syndicates because people privately enter into negotiations and do not report when victimised.Kiraithe asks the public to be wary of shylocks and borrow money from recognised financial institutions. Meanwhile, he says police will investigate the racket.*Some names of victims have been changed to protect their identity.

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