Digital lenders are now looking to provide customers with loan extensions as well as repayment plans to mitigate the negative impact of COVID-19 on small businesses.
Following a consultative meeting in Nairobi, the Digital Lenders Association of Kenya (DLAK) announced a number of measures aimed at addressing the adverse economic and health effects of the COVID-19 pandemic to protect customers with digital loans.
The lenders will also enable the applications, justifications and documentation collection in an electronically and formalized way.
“As we continue to monitor implementation of these measures and the evolving nature of the Covid-19, we are calling for solidarity in counteracting the adverse effects of the epidemic,” DLAK said in a statement.
A report by Financial Sector Deepening Kenya shows that majority of Kenyans access digital credit for business purposes such as investing and paying salaries, and to meet everyday household needs.
As per the study, 35 per cent of borrowing is for consumption, including ordinary household needs, airtime and personal or household goods.
The report shows 37 per cent of borrowers reported using digital credit for business, while only seven per cent used it for emergencies.
With massive job cuts looming as firms turn to austerity measures to deal with revenue shortfalls as the country begins to feel the devastating impact of coronavirus.
A number of Kenyans may be forced to turn to digital lenders to make ends meet.
As part of DLAK's measures, the loan institutions will be guided by the special circumstances and ethical principles of responsible lending.
Customers have also been advised by DLAK to update their scoring models and the method of calculating creditworthiness to include the economic and social impact of COVID-19.
The government and private institutions on Monday sent most of their employees’ home as part of the social distancing measure to curb the spread of the virus that has since affected over 240,000 people globally and killed more than 10,000 others.
DLAK will also adjust the offers by considering the need to ensure the liquidity of households and microbusiness entrepreneurs suffering temporary, negative effects of the epidemic, such as payment holdup or delayed salary.
