‘Lipa mdogo mdogo’ and the return of hire Purchase

ART, the blue and yellow logo captioned, Kwa malipo ya rahisi might be a relic of the 1970s to 1990s that helped an entire generation of Kenyans own basic household items.

If you have ever heard about hire Purchase, you are probably old and familiar with ART, Kenya Credit Traders and the Amedo franchise for Singer Sewing machines.

These were the ultimate loan providers that gave families household goods, electronic assets like radios, TVs and fridges, utensils and furniture.

Then like the Kodaks, pagers, letters, floppy disks or record player cassettes, these companies just died out.

The need for hire purchase has never gone and it was not some archaic way of doing things, in fact, the need might have grown if these pioneer institutions might have had a peek into the future.

Today buying a phone from a Safaricom shop can be done using the very same method of hire purchase through the recently launched ‘Lipa Mdogo Mdogooffer.

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By paying as low as Sh1000 deposit at any Safaricom shop and subsequent Sh20 bob instalments every day through the Safaricom App, the hire purchase smartphone financing plan will cost the customer a total of Sh6,580.

This is the same model used by M-Kopa solar for household gadgets and phones that has made it a big company in Kenya.

It is how customers in the US can afford to get the latest iPhone and South Africans can buy the latest Mercedes Benz.

It is the rise of data that the ART,  KCT and Amedo could never have dreamed of.

During the old days of hire purchase, a civil servant who had just gotten a job would go to the shop and get his/her wish list then go back to the employer to get a letter of approval to be able to opt for the check-off hire purchase system.

Just imagine HR had to know you were about to buy a Greatwall TV, those tiny black and white antiques, they would know when you were buying a sewing machine for your wife and God forbid, a fridge!

Repossessions were also ugly business since the businesses and you were literally strangers with no way of contact tracing.

But with the rise of data, a company like Safaricom which habours the platform for M-Kopa, Mshwari, KCB Mpesa, water, electricity and internet bill payment channel and a host of other financial services is basically your personal finance partner.

Through the ‘Lipa Mdogo Mdogo’ for instance, Safaricom identifies eligible customers through their use of Safaricom services for at least one year, using M-Pesa, voice and SMS services.

Lipa Mdogo Mdogo actually targets individuals with 2G phones and is looking to roll out the service to 3G mobile users later.

Safaricom does not need to waylay you or spend money on repo men to track you down since you will still require their services one way or another.

In fact Lipa Mdogo Mdogo allows customers who fail to pay daily instalments an additional three day grace period after which Safaricom will engage them on the default.

This is a rallying call for banks and other financial institution that while they are still resisting use of Credit Reference Bureau (CRB) data to bring down the cost of loans and make them accessible, hire purchase may just come back and eat their lunch.

This time not selling TVs and sewing machines, but maybe a car for lease, an Uber moment for owning vehicles.

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