This archive report was first published on 2 September 2021.
Published on September 2, 2021, a report by Reel Analytics, a consumer intelligence firm, has shed light on the state of digital lending in Kenya. The report, titled State of Digital Lending in Kenya 2021, found that employed Kenyans make up the majority of those who seek loans from digital lenders.
According to the report, 65% of formal workers borrow from online lenders, followed by those in the informal sector at 59%. In contrast, the unemployed make up the least in the population surveyed of people who borrow from digital lenders, at 39%.
The report also revealed that M-Shwari is the most popular digital lending platform, with 40% of respondents using the service. This is followed by Tala at 36%, Fuliza at 30%, Branch at 23%, and KCB-Mpesa at 22%.
When asked why they prefer digital lending platforms, the majority of respondents cited convenience and easy access to loans. In the absence of digital lending platforms, most Kenyans would seek business growth loans from close family members, but this option is considered less convenient due to unpredictable loan accessibility and smaller loan amounts.
Interestingly, the report found that a majority of customers (over 60%) are satisfied with the services of digital lenders, and there are no strong formal or institutional alternatives to digital lenders. When asked about their prime alternative to digital lenders, 40% of respondents said they would borrow from relatives, while only 10% would opt for banks and Saccos.
Key factors influencing the decision to borrow from digital lenders include ease of access (39%) and speed of disbursement (22%). Men dominate the borrowing from digital lenders at 59%, while women are considered more 'loyal' and 'default-concerned' borrowers.
