MOBILE LOANS

Men dominate digital borrowing - report

A study carried out between November 2018 and April 2019 shows the majority of the men accessing mobile credit were aged between 31-40

In Summary

•Although mobile lenders did not share loan information with the CRB, this could be an indicator that the majority of digital credit seekers were people in both the formal and informal sectors engaged in commerce

•People between 31-50 had around 50 per cent of mobile loans, while 21 per cent for young people and three per cent for people more than 60 years old

Tala app, an online financial micro lending platform is seen on a mobile phone in this photo illustration taken May 23, 2018. REUTERS/Thomas Mukoya/Illustration
Tala app, an online financial micro lending platform is seen on a mobile phone in this photo illustration taken May 23, 2018. REUTERS/Thomas Mukoya/Illustration

Men are taking up more mobile loans than women, a new survey shows.

The report by  Creditinfo shows 65 per cent of digital loan borrowers were men with the remaining 35 per cent issued mobile loans going to women.

According to the study carried out by the credit reference bureau between November 2018 and April 2019, the majority of the men accessing mobile credit were aged between 31-40.

 

“This goes against reports showing youth are the main digital borrowers,” Creditinfo regional manager for East and Southern Africa Kamau Kunyiha said.

He added that although mobile lenders did not share loan information with the CRB, this could be an indicator that the majority of digital credit seekers were people in both the formal and informal sectors engaged in commerce, looking to facilitate their businesses.

“People between 31-50 had around 50 per cent of mobile loans, while 21 per cent for young people and three per cent for people more than 60 years old,” the report stated.

The CRB, which handles credit information for 15 digital lenders said 19.1 million loans, were disbursed over the review period valued at Sh112.5 billion. The loans were disbursed to 4.5 million borrowers including 855 million small businesses.

A Financial Services Deepening Kenya (FDS) in August last year showed that there are 49 digital credit providers in the country and every year a new one is introduced into the market

Kunyiha said 93 per cent of mobile loans were provided by the banking sector as lenders leverage on digital credit to boost their earnings.

As Kenya’s digital revolution resulted in the mushrooming of non-bank digital lending apps, formal banks joined the bandwagon charging interest of between four and 7.5 per cent per month.

 

Commercial Bank of Africa and Safaricom’s M-shwari may be the top of the cream having been launched in 2012.

Others are Equitel and KCB-Mpesa following close by as top contenders when it comes to digital credit, battling for market share with non-bank digital lenders such as Branch and Tala. 

The survey shows although there was a 10.7 per cent default rate during the review period, around 70 per cent were still able to access credit from both digital and traditional channels.

Kunyiha said lenders should be more cautious when disbursing loans, adding that a borrower who had already defaulted once was likely to default on a second and third loan. 

“Digital lenders are going by the default notion that not everyone who does it is necessarily bad. This is however not the situation in most cases,” Kunyiha said.