Chief of Defence Forces General Charles Kahariri has warned KDF soldiers against shylocking and exploitative lending, saying it undermines welfare and discipline. Offenders risk court-martial under the KDF Act.
The Chief of Defence Forces of the Kenya Defence Forces (KDF), General Charles Kahariri, has warned soldiers against shylocking and financial indiscipline, cautioning that exploitative lending practices could undermine their welfare and military discipline.
Kahariri issued the warning during his KDF Day commemorative tour. On October 17, he visited troops deployed under Operation Maliza Uhalifu in Doldol, and personnel at the School of Military Engineering in Archers Post, Isiolo.
The CDF cautioned soldiers against exploitative lending arrangements. He urged them to be financially responsible and to avoid practices that could compromise their professionalism, personal stability and ability to perform their duties.
Shylocking is informal lending outside regulated financial systems. Borrowers often face steep interest rates and aggressive debt recovery tactics that can leave them struggling to repay.
In Kenya, some informal lenders reportedly charge monthly interest of between 20 and 30 per cent, with rates sometimes reaching 40 per cent on short-term loans, which makes debts pile up quickly.
Cases involving KDF personnel have exposed alleged financial scams, including the "pata potea" scheme, in which servicemen reportedly borrow millions from civilian lenders for business projects and then default. Other schemes involve soldiers allegedly soliciting money from civilians in exchange for promised KDF recruitment slots, with informal loans sometimes linked to bribery and favours, according to KDF reports.
One case involved a Nairobi-based KDF serviceman who allegedly borrowed over Ksh3 million from a civilian lender under the pata potea scheme, then blocked her number and defaulted.
In another, former Sergeant Andrew Muoki Mutua was sentenced to 42 months in prison after a court-martial found him guilty of soliciting money under false pretences, including Ksh300,000 and Ksh450,000.
KDF personnel involved in unauthorised lending schemes risk disciplinary action under the Kenya Defence Forces Act, 2012, particularly where their conduct undermines military discipline or involves alleged fraud.
Serious cases may lead to court-martial proceedings under Section 121, which addresses conduct prejudicial to good order and discipline, or under Section 133, which covers civil offences. Under Section 180, court-martial sentences can include imprisonment, dismissal from the Defence Forces, reduction in rank, fines or reprimands, depending on the offence and circumstances.