This archive report was first published on 28 October 2019.
Published on October 28, 2019, a new survey revealed that nearly 17 million digital loans have been disbursed in Kenya, as the country's mobile phone users increasingly turn to their devices to access credit.
The study, conducted by Microsave Consulting, found that the number of digital loans issued has approximately doubled in the past two years alone. Between 2016 and 2018, the study found that 86 per cent of the loans taken by Kenyans were digital in nature, reflecting the increasing popularity and penetration of digital lending.
According to the study, digital credit is instant, automated, and remote, providing borrowers with quick access to short-term loans. Young men below the age of 35 are the ideal digital borrower, a fact that could be linked to sports betting, which is predominantly a male pastime.
The study also found that two in three borrowers had taken multiple loans, indicating the possibility of taking one loan to settle another. This could reflect the low loan limits that fail to fulfil needs and the short tenures that increase pressure on repayment and require a new loan to repay the previous one.
Among the other findings is the soaring number of defaults on digital loans. Half of the defaulters reported are among the poorest, each with outstanding loans of less than Sh1,000 and already blacklisted with the various credit reference bureaus.
Information gathered from the 50 digital lenders revealed that commercial banks, working with mobile service providers such as Safaricom, have a stronghold of the market.
