This archive report was first published on 14 September 2019.
Published on September 14, 2019, a report has shed light on the high costs associated with digital lending in Kenya.
According to the study, buying electricity tokens through the Okoa Stima loan is the most expensive form of digital lending, with consumers paying up to 43.4 percent interest.
“Okoa Stima allows you to borrow any amount based on your pre-determined credit limit. This limit is based on your historical relationship with Kenya Power. The loan comes at a facility fee of 10% and is payable in 7 days,” a statement on the Safaricom website reads.
Other digital lenders, including Pesa na Pesa and Kopa Chapa, were also found to be charging high interest rates, with Pesa Pata ranking fourth at 30.4 percent.
The report, titled Digital Credit, Financial Literacy and Household Indebtedness, also highlighted the lack of financial literacy among those who have used digital lending apps, with many consumers unaware of the interest rates they are paying.
Bankers were also criticized for not educating their customers on the risks associated with digital lending.
