This archive report was first published on 22 October 2019.
Tala's Ivan Ombowa on Digital Lending in Kenya ¶
It's now easier than ever to access credit in Kenya, thanks to the proliferation of digital lending apps. Among the players in this space is Tala, a mobile and data science company that's leading the scramble for customers seeking quick mobile loans.
Financial Standard spoke to Ivan Ombowa, Tala's East Africa general manager, about the wide-ranging issues affecting the industry. According to Ombowa, the idea to start Tala was conceived five years ago, with a smartphone-based credit product that allowed Android users to be evaluated on their creditworthiness and access credit from Sh1,000 to Sh30,000.
Since its inception, Tala has served over 2.5 million Kenyans and expanded its model into five other countries. Ombowa notes that the company's target market has been those who are underserved, with over 75% of its loans being used by small businesses.
When asked about the credit range, Ombowa stated that Tala still gives clients between Sh1,000 and Sh30,000, but expects to change this in the next five years as the company evolves its products. The majority of borrowers, he added, borrow around Sh10,000 on average.
Regarding the competition, Ombowa rates Tala as number one among non-bank digital credit providers. However, he notes that the company faces challenges, including the lack of financial literacy and the need for greater scrutiny about where money comes from and to whom it goes.
On the issue of self-regulation, Ombowa denies allegations that the Digital Lenders Association of Kenya, which Tala is a part of, is trying to lock out smaller players. He emphasizes that the association is a form of self-regulation, bringing together about 15 digital lenders who have agreed to sign a code of conduct.
When asked about listing defaulters with the Credit Reference Bureau (CRB), Ombowa stated that Tala lists defaulters somewhere between the due date and one year.
