KATAPILA " MOBILE BANKING "
THE AGE OLD BUSINESS

Going back to the history or the evolution of money as the medium of exchange we learn that immediately money was adopted as a medium of exchange then followed the associated business of money lending. This was way before the evolution of the modern day banking institutions. Even in the New Testament Bible we read that Jesus Christ overturned tables of money changers who were trading in the synagogue, as the house of God was turned into a market place.

Thus the business has evolved over a long period and still thrives to date. In Malawi the trade commonly known as Katapira thrives as a secretive business. This business has its own unwritten code of ethics that has been passed from generation to generation. What make the business so unique are the rules of operation or code of conduct and how actions are enforced. Although the business is illegal and not recognized by the registrar of businesses and the Malawi Revenue Authority, the sample research I did shows that the trade involves billions of Kwacha in turnover.

Malawians have and are involved in this business from as little as K10 to millions of Kwacha. The modus operandi is secretive. What one has to do is approach the mobile banker and submit your application which is verbal. The mobile banker provides the cash and you agree on what you have to pay back. This will include the sum borrowed plus interest which is calculated at rates ranging from 50% to 100% of the capital per month translating to rate in excess of 5000% per annum.

The business is prevalent in most small scale business operations. Individuals borrow to invest in a venture and afterwards pay off the money lender. The deal can be for just a day, say one borrows K10, 000 in the morning and has to pay back K15, 000 in the evening! In this business compliance to terms and conditions is strictly enforced albeit without the legal enforcement or courts. I know of numerous people who have lost assets such as motor vehicles, household items, even houses! The lender will usually hold an assignment of a specific asset from the borrower which normally will take the form of a sale agreement. In this agreement all the borrower is required to do is to indicate that the borrower has sold that specific asset to the lender at the price of the total of the loan plus interest. If on due date the borrower fails to pay back the loan or just the culculated interest the amount due becomes the principle and interest is recalculated or compounded. This exercise will go on and on until the value of the pledged asset is almost equal to the amount due to the money lender.

One would question why this business has eluded the law. The answer is because of the secretive nature of the transactions and the fact that the operators maintain a certain secret code of conduct. You will only know of the deal once it gets sour. The Katapira business has thrived over the years and in Malawi it caters for all. There are people who have borrowed from the banks to pay off Katapira debts and visa versa. The best aspect of the deal is the speed at which one is assisted. An application for a loan through the banks would take a lot of effort and negotiation whereas in Katapira all you need is the assurance of paying back and the assignment of some informal security which conventional banks can not accept.

While this business has eluded the law it has become accepted in our society. The worst part of it is that the business is addictive. Once one gets into Katapira you tend to be hooked and the consequences have been disastrous. It will remain difficult for the government to regulate this business as long as the transactions remain secretive.