The usage of mobile loan services by Kenyans is reported to have increased significantly with an approximated 17 million digital loans being disbursed by mobile lenders operating in the country.
Research conducted last month by Microsave Consulting firm has indicated a major and rapid growth of borrowing from mobile money lenders. The research also highlighted high default rates in settling relatively small loans.
Of these, 86 per cent of loans processed by Kenyans between 2016 and 2018 have been reported to be digital. This is a reflection of the increased popularity of digital loans in the country.
“Across Kenya, 16.4 million loans have been disbursed digitally since the launch of the first digital credit offering seven years ago. In the past two years alone, the number of digital loans issued has approximately doubled,” part of the report read.
The study also indicated that men under the age of 35 are the ones who use the ideal borrowers of the digital loans. This indication could be attributed to sports betting which is popular among young men.
Smart Campaign, which is a social movement whose aim is to advocate for responsible borrowing and consumer protection, employed Microsave Consulting firm to conduct the research.
Kenyans may, however, be straining to settle some of the loans as two out of three borrowers are reported to have accessed multiple loans. This move is due to the fact that the borrower takes one loan to settle another.
A significant number of borrowers especially those with loans of less than Sh1,000 have reportedly failed to pay back.