This archive report was first published on 4 December 2019.
Published on December 4, 2019, a study by CreditInfo has shed light on the lending habits of banks and mobile lending apps in Kenya. The report found that despite knowing the high risk of lending to defaulters, these lenders continue to advance loans to individuals with a history of defaulting on loans.
According to the study, digital lenders advanced loans to 398,160 borrowers with a default history, with 70% of them defaulting on the new loans. Similarly, banks advanced loans to 115,869 borrowers with a default credit history, with half of these borrowers going on to default on the new loans.
Kamau Kunyiha, the CEO of CreditInfo, noted that the failure to pay loans speaks more to the character of a person rather than their financial ability to service a loan. He added that while not everyone who defaults is necessarily bad, a good majority of defaulters have character and discipline issues once they default.
The study also found that the banking industry dominates mobile lending, having advanced 93% of the loans, leaving the balance to more than 50 other lenders. CreditInfo analysed data on 19.1 million loans lent to 4.5 million individual borrowers and 855 companies by 15 lenders between November last year and April this year.
