This archive report was first published on 4 December 2019.
Kenya's lending market is facing a crisis, with a staggering 70% of past loan defaulters failing to pay new loans, according to a recent survey by CreditInfo, a leading credit reference bureau.
The survey, which analyzed mobile loan trends between November 2018 and April 2019, found that banks and mobile lending apps continue to lend to high-risk borrowers, despite full knowledge of the risks involved. This has resulted in a significant number of borrowers defaulting on their new loans, with 50% of those who had previously borrowed defaulting on their new traditional loans.
“In spite of getting opportunities to borrow after previous defaults, some debtors are still ending up with bad loans on the new facilities. This is a character issue and largely a show of financial mismanagement,” said CreditInfo Chief Executive Officer Kamau Kunyiha.
The report also revealed that men under the age of 25 and those between 31 and 40 years are the most indebted, with more than two-thirds of mobile loans being taken by men. Men in these age groups are likely to be struggling to afford comfortable living and are often forced to take loans to finance their basics and pressured lifestyles.
Only 35% of women took loans, and men also take bigger loan amounts, with an average loan size of Sh6,086 compared to the average loan size that women take at Sh5,472.
