Extended repayment term may not curb thirst for digital credit- Oigara

In Summary

•A daily customer does not want to be forced to endure a longer repayment period

•Google is looking to scrap financial apps requiring full loan repayments in 60 days or less 

KCB Joshua Oigara
KCB Joshua Oigara

KCB Group managing director Joshua Oigara says increasing the mobile loan repayment period may not curb Kenyans’ rampant appetite for digital credit.

This comes after on Wednesday Google published a policy mandating financial applications on its Play Store arm to crap apps that promote personal loans, which require repayment in full in 60 days or less from the date the loan is issued.

The majority of mobile lending platforms in the country fall under this category as they offer loans payable within 30 days.


Only applications owned by banks, which are regulated by the Central Bank offer repayment periods extending up to a year for the short-term credit facilities.

In reference to mama mboga, Oigara argued that the consumer may not benefit from a long term repayment period as most of them borrow cash to acquire stock at the crack of dawn and have the loan paid back at the end of the day with leftover profit to take home.

“The microloans focus on the small traders, for here and today,” he said. “A daily customer does not want to be forced to endure a longer repayment period.”

He added that despite the lender offering a range of mobile loans with repayment periods ranging from one month to a year, most borrowers were opting for the option to repay the loan within a month.

Although Google has given affected firms 30 days to comply with the directive, Oigara believes dialogue should be initiated to understand the workings of the Kenyan market to get a solution that will actually tackle the continued abuse of mobile loans.

“The conversation should be based on the loan pricing,” he said. “The moral hazard comes from giving too much credit to a borrower who may not even qualify for it, but they will take it.”

A report on digital lending released by Financial Services Deepening Kenya (FDS) in August last year shows that there are 49 digital credit providers in the country, with a new one launching every year.


The accessibility of mobile app loans risk turning borrowers in Kenya into debt trap, with recent report by FSD and CBK indicating that 50 per cent of households are forced to borrow elsewhere or sell assets to repay loans.

According to the survey, almost 70 per cent of adults aged 18 years and above with personal loans have experienced at least two of those conditions or both, illustrating signs of debt stress.

Oigara said there was the need for a holistic ‘single credit score’ for the mobile customer to ensure they are not borrowing beyond their means.

“Perhaps there are also too many of us providing the same amount of credit to the same customers,” he said.

Kenya's leading digital lending platform Tala commenting on the move by Google said the policy was mainly targeted at predatory lending, adding that the firm's product is designed to fit the unique needs of underserved consumers. 

"Unlike many payday lenders, we do not charge accruing interest. We work collaboratively with Google to comply with their policies," Kevin Kaburu, a communication officer at Tala said.