Experts warn rising trend of buying mobile phones on credit may fuel debt burden

By Juma Shabani

Dar es Salaam. The growing practice of purchasing mobile phones on credit has sparked concerns among economic experts, who warn that the trend could place consumers under significant financial strain if they fail to assess their repayment capacity before signing agreements.

Telecommunication companies and retail shop operators have been selling the phones by requiring an upfront payment and allowing buyers to repay the remainder in daily instalments.

However, some buyers end up in a debt trap, forcing them to pay even twice the original price.

Prof Abel Kinyondo of the University of Dar es Salaam said it is crucial for customers to weigh their income against the purpose for which they intend to use the device.

“If a phone is acquired for income-generating activities, such as facilitating financial transactions, it can pay for itself. But for ordinary use—for example, entertainment—it is easy to incur losses,” he said.

Similarly, Mr Selemani Rajabu, an economics teacher at Milambo High School, cautioned that customers with unstable incomes are the most affected by the ongoing instalment payment system.

He said many borrowers end up taking multiple loans to settle outstanding phone debts, deepening their financial obligations and, in some cases, fuelling household tensions.

“Some even resort to fraudulent behaviour just to avoid having their phones deactivated. Others lose income opportunities entirely when their phones are switched off, as they cannot communicate with their clients,” he added.

One of those who have struggled under the system is Ms Mwinamila Shabani, a resident of Uyui, Tabora. She said she obtained a phone after paying Sh35,000 upfront, with a repayment plan of Sh650 per day for 18 months—amounting to about Sh351,000, more than double the original price of Sh150,000.

However, financial hardship made it impossible for her to keep up with the instalments, and the company eventually switched off the device.

“I had to find a smaller, cheaper phone so I wouldn’t lose communication. The debt was beyond my means, so I decided to give the device to someone else who could continue paying for it, as long as they refunded part of what I had paid,” she said.

Ms Shabani urged telecommunications companies to improve the structure of their loan products and consider offering incentives to customers who complete payments ahead of schedule.

On the other hand, one of the operators who sell phones on credit, Mr Abdul Siera, said most challenges arise because customers do not fully understand contract terms before signing.

“We ask customers about their income and living expenses, and we explain both the actual price of the device and the total loan cost. But many do not pay close attention. At the same time, there are customers who take as many as three phones and pay without difficulty,” he said.

Stakeholders are calling for enhanced public education on contractual obligations, greater transparency in loan charges, and reforms to repayment systems to mitigate the growing social impacts tied to this rapidly expanding line of business.