This archive report was first published on 21 August 2019.
On Wednesday, Tala announced a significant investment of Sh11 billion to fuel the launch of new products and grow its operations worldwide.
The five-year-old startup has secured funding from RPS Ventures, with GGV Capital and previous investors IVP, Revolution Growth, Lowercase Capital, Data Collective VC, ThomVest Ventures, and PayPal Ventures participating in the new financing round.
Tala's General Manager in East Africa, Ivan Mbowa, stated that the new round of funding will enable the online micro-lender to reach more customers.
With the ability to approve loans within minutes and disburse funds via mobile payment platforms, Tala has lent over $1 billion to more than 4 million customers to date, up from $300 million to 1.3 million customers the previous year, according to Shivani Siroya, the founder of the app.
The company boasts over 2.5 million customers in Kenya, with a significant portion of its operations based in the country. Mr. Mbowa expressed gratitude for the loyalty and trust of Tala's Kenyan customers, stating, 'Kenya is at the heart of Tala's operations around the world. Kenya was our first home, and today it remains our largest office and customer base. We are thankful every day for the loyalty and trust of our Kenyan customers.'
However, a recent study by The Financial Sector Deepening (FSD) survey, backed by the Central Bank of Kenya (CBK), revealed that about 20% of Kenyans are loan defaulters, with the most affected being unemployed and low-income employed youths, farmers, and the elderly.
With the added funds, mobile-based digital lender Tala may exacerbate the household debt burden, particularly among vulnerable groups.
According to the study, approximately 6.5 million Kenyans are digital borrowers, with 31% using the cash to try their luck in sports betting and gambling.
