“A Loan App Asked for My Selfie to Sign Up, I Just Found Out Why”

EDITOR'S NOTE: This article is a part of our Money254 Partner Series and is produced in partnership with Zenka Digital Kenya. For more on Money254’s editorial policy, read here.  

In January 2017, I was working as a turnboy for my uncle, who is involved in the transport industry. It was a temporary job for the three months I was on long holiday at a college based in Nairobi. 

One weekend, I found myself in Himo, in rural Tanzania where we had gone to buy tomatoes for resale in Nairobi. After a hard day’s work on the farms, we retreated to Himo Town centre where we hoped to get refreshments. 

I am allergic to dust, which I usually manage by taking a cold glass of milk after exposure. I am not sure if there is a scientific explanation, but it works for me. My first stop was at a supermarket where I quickly grabbed two packets of milk. 

An Accidental Friendship

As I queued to make the payment, I struck up a conversation with the person next to me. In the small talk, I realised I had mistakenly picked sour milk (maziwa mala), which the Tanzanians label Mtindi. 

I had assumed that Mtindi was a pasteurised milk provider - given that the packaging is similar to what we use in Kenya. That chance encounter would lead to a long-lasting friendship and multiple business opportunities. 

The gentleman I had struck up a conversation with is named Juma, he hails from a place known as King’ori, in the outskirts of Arusha town. Juma has lived in Kenya for 33 years. 

He started out as a farmhand before venturing into transport -  he mainly buys cereals in Tanzania and re-sells them in Kenya. 

The long holiday ended and I resumed school. I was taking a diploma in sales management at a college in Nairobi CBD. I graduated in 2018 and got a job as a salesman at a soft drinks distribution company. 

Journey to Wisdom: Life After College

This has been my job over the past four years. I love my job. It involves two of my passions - traveling and talking to people. 

I have been to every part of Kenya through this job, from the southern tip in Vanga, to the northern tip in Kakuma, as well as in Mandera to the southeastern tip in Lamu. 

And of course, I get to drive the company car, a 2009 Toyota Probox. 

These frequent travels have opened my eyes to some of the money-making opportunities that I would typically take for granted.  Every town, and nearly every village has some unique products that they either need or produce. 

I occasionally top up my income by taking advantage of this gap. As a side hustle, I buy goods where they are in surplus and deliver them where there is a shortage - of course at a profit. I am lucky to have a good boss who allows us to use the company vehicle so long as the weight is within reasonable limits. 

In Loitoktok, for example, I always get an oversupply of tomatoes. A farmer in Kimana actually gives me two free crates of tomatoes every time I pass by. His only request is that I bring him fresh cabbages, which I usually get at a discounted price from Kinangop. 

In Baringo, I get genuine honey that is in demand in most parts of Kenya, while in Nyandarua, the potatoes are as cheap as they come - and the locals are always looking for warm duvets and jackets which I stock up from Gikomba - whenever I am in Nairobi. 

Tales About “Red Gold” From Tanzania

Last month, I was in Isebania, Migori County, near the Kenya-Tanzania border when I bumped into Juma. Remember my Tanzanian friend I first met in Himo? 

We occasionally bump into each other - since we are in the same industry. 

Now, Juma is quite a chatty fellow. Everyone who spends time with him is drawn by his boundless energy and his seemingly endless supply of business advice. 

His advice ranges from the practical - which farm products have the highest margins - to the whimsical, how to humour your way out when you come across difficult traffic police officers. 

On this day, he went on about why the prices of onions were continually going up - that some people have started nicknaming them the “red gold”.  He went on to reveal to us that the only area that had recorded a decent harvest of onions this harvesting season was in Mang’ola - a small town in Northern Tanzania. 

I did not think much of the story until I found myself in Mang’ola, while travelling for work. I was surprised to find a 50kg bag of onions retailing for as low as Tsh60,000. 

This translated to about Ksh3,400 for the 50kg bag and about Ksh70 per kilo. A kilo at my local grocery store in Nairobi was going for Ksh200, one onion piece was selling for as high as Ksh15!

Mama Carol’s Important Phone Call

I decided to buy one 50kg bag and test how much it would fetch in Nairobi. I took it to my mama mboga, Mama Carol, who agreed to buy it at Ksh6,500 for the bag - about Ksh130 a kilo. The simple trade gave me Ksh3,000 in profit, sweet!

I went back to my routine travels, picking some random products along the way. In mid-August, however, Mama Carol called and requested for another bag. 

Unfortunately, I was on leave and would not be travelling to Arusha for another month. However, my entrepreneurial mind registered an alert and I asked if she was in a position to get other traders in Nairobi and environs. I figured that if I was able to get a bulk order, then I could make the delivery through my personal means and cash in on the profits. 

Within a day, Mama Carol had convinced 20 retailers to make their orders. They needed a combined 700 kilos - equivalent to 14 bags of the 50kg bags of onions. 

I did some quick math and realised that by making Ksh3,000 per 50kg bag, I would get about Ksh42,000 if I was able to deliver the 14 bags before the market prices changed. 

Unfortunately, the opportunity came when I was not in the best of financial health. I had just helped pay school fees for my younger sister, leaving me with about Ksh30,000 mbele nyuma! 

Some quick calculations indicated I would need about Ksh72,000 to pull through with the plan. 

The costs included:

• Hiring a pickup truck - Ksh6,000 (the market rate would be about Ksh10,000 but I have many friends in the industry)
• Fueling the car - Ksh 14,000
• Buying the stock - Ksh49,000
• Miscellaneous - Ksh3,000

With my Ksh30,000, the deficit stood at Ksh42,000. Juma came through for me and agreed to give me one of his pick-up trucks for Ksh5,000. 

After I explained to him my situation, he agreed to collect the cash after I made the deliveries. Major hurdle passed. The deficit was now at Ksh36,000. 

Bumps on the Road to Success

I later called Mama Carol and requested that she and her team make the full payment in advance. I indicated I wanted to confirm that they were serious about the orders but I was just trying to find an easier way to make the purchases now that I was low on cash. She called me back an hour later with some not-so-good news. 

Her team was not comfortable making a full payment before seeing their goods. Instead, they offered to pay a 20% deposit to show commitment and clear the balance after I had delivered the onions to their specific stores. They gave me Ksh18,000. 

The deficit was now at Ksh19,000. So close yet so far. This balance proved nearly impossible to raise. The difficult financial situation has really emptied people’s pockets. My close friends, relatives, and colleagues were all on a tight budget. 

I was almost giving up when I remembered that I had downloaded the Zenka Loan App. I had used it in the past in an emergency situation where one of my siblings had fallen sick and needed emergency admission. 

A Much-needed Lifeline

I was not sure, however, if my limit would be enough to cover the deficit. I updated the app on the Google Play Store and proceeded to log in. After filling in my login information, I was surprised to be asked for a selfie. This feature was not there during my first loan application so I hesitated for a moment. 

However, time was running out and since I planned on repaying as soon as I had delivered the “red gold”, I was not overly concerned about it. 

Luckily, my limit was slightly more than the Ksh19,000 I needed to settle the order. I, however, only applied for Ksh19,000 and hit the Nairobi-Namanga highway the next morning - leaving Nairobi at 2am. 

The trip went well, save for one puncture and a few levy fees that I had missed while doing my math. I got back to Nairobi at around 4pm and started making my deliveries. 

At the end of the day, I had made Ksh14,500 in profits. This was after deducting all the costs associated with the trip - including the fees for the loan I had gotten from Zenka. 

Why the Selfie, Though?

A few days later, I got really curious about the selfie requirement and started googling about it. 

It was then that I realised that Digital Credit Providers (DCPs), commonly referred to as “digital lenders” are just like banks when it comes to the Know Your Customer (KYC) process. 

Digital lenders fully earned this status when they were placed by law under the supervision of the Central Bank of Kenya (CBK) - the apex bank which also regulates commercial and microfinance banks - in 2022.

Zenka, for example, is one of the first 32 DCPs to be licensed by the Central Bank of Kenya (CBK). 

The DCP licensing process, which is still ongoing for at least 369 more applicants,  involves other regulators and agencies pertinent to the licensing process, including the Office of the Data Protection Commissioner (ODPC) to ensure DCPs process borrower’s data in compliance with data privacy laws.  

The selfie requirement mirrors what traditional banks would ask in the form of a passport-size photo before opening an account. In fact, when opening some digital bank accounts, you are required to submit a selfie.

Some examples of bank accounts requiring a selfie as part of the account opening process that I saw online include the Absa Digital Savings Account and Diamond Trust Bank (DTB)’s Bank 24/7 Digital Account. 

From unlocking the smartphone to online banking to digital lending - the selfie is being used to save us from forgotten passwords, protect our identity against impersonators, and increase convenience in this increasingly digital world. 

I also found an interesting story of prominent Kenyans - one a sitting Senator and the other a leading businessman - who had found themselves listed on Credit Reference Bureaus (CRBs) for digital loans that they had not applied for. 

Fraudsters, I learned, can use someone else's ID number, possibly gotten from a visitors’ book at a building entrance, register SIM Card, and then proceed to take loans - pretending to be the legitimate holders of the respective ID cards. 

Some telecommunications companies too - in light of these incidents - have sought to retroactively get selfies through their mobile money apps to curb identity theft fraud. 

With this, I learned that the selfie feature is used to confirm that the person applying for a digital loan is actually a real person - through an AI system that matches the selfie submitted with the picture in the copy of the ID that also needs to be submitted in the application process. 

It seems the proof of identity provided by the addition of the selfie, may have a positive effect on the applicant’s loan limit and could increase the speed of approval to just a matter of seconds - as was the case for me when I made my application.