This archive report was first published on 4 December 2019.
Published on December 4, 2019, a report by Creditinfo, a provider of credit information, has shed light on the reasons behind the high default rate of mobile loans in Kenya.
According to the report, 70% of Kenyans default on mobile loans due to lack of discipline, rather than being inherently bad or financially irresponsible.
"The default notion here is that not everyone who defaults is necessarily bad, a good majority of them it's a character issue, it's a discipline issue because once they default, they default on the other," notes Kamau Kunyiha, Chief Executive Officer at Creditinfo.
The survey, conducted between November 2018 and April 2019, covered 15 lenders and found that 50% of mobile loans were issued to people between the ages of 31 to 50, while only 21% went to young people aged 25 and below.
Interestingly, 90% of customers surveyed borrowed from two lenders, with 23% having one loan and 19% borrowing from more than seven loan apps during the period.
"More people are borrowing from one lender, there is good retention strategies coming through. My belief is that the banks are gonna start moving from this being just a product but becomes a channel for customers to access their services," explains Kunyiha.
Commercial banks still account for a huge percentage of the mobile loans at 93%, despite the proliferation of digital apps.
