Nairobi: The Digital Credit Providers have experienced significant growth recently, with current monthly disbursements of over Sh.13 billion in loans to borrowers. This expansion is largely due to the accessibility of digital lending platforms, particularly through mobile devices.
According to Kenya News Agency, the sector has seen a surge in accounts from 600,000 to 3.32 million in the past two years, as more Kenyans turn to loans to offset basic needs amid slow economic growth. Kevin Mutiso, Chair of the Digital Financial Services Association of Kenya (DFSAK), noted that approximately 5.5 million Kenyans access loans monthly from 40 registered agencies. While consumption is the primary reason for borrowing, the sector also aids in financing enterprises and start-ups.
Mutiso highlighted that the industry has contributed to the acquisition of over 230,000 smartphones through loan financing and funded over 68 million motorbikes on Kenyan roads. Despite concerns over rising default rates, he assured that the sector employs artificial intelligence and big data from credit bureaus to identify high-risk borrowers. He also mentioned that 84 per cent of Kenyans have access to financial services, and the association is collaborating with the Central Bank of Kenya (CBK) on new regulations to tackle challenges, including rogue lenders.
Sam Omukoko, Founder and Group Managing Director of Metropol Credit Bureau, commented on the positive impact of credit information sharing on loan accessibility. However, he expressed concerns about the rise in non-performing loans, which average 20 per cent, attributing this to harsh economic conditions and borrowing for consumption rather than investment. Omukoko indicated that Metropol has registered over 27 million credit-accessing accounts and stressed the importance of lenders tailoring products to customer needs.
Ali Hussein, Chair of the Fintech Alliance of Kenya, raised concerns about borrower data protection, highlighting exploitation by unscrupulous sector players. He emphasized promoting borrowers' financial wellness due to reports of high indebtedness from accessing multiple loan facilities.
David Sandaji, CEO of the Sacco Societies Regulatory Authority (SASRA), reported that over 120 SACCOs have introduced digital products, enabling Kenyans to access various loan facilities. However, he flagged cybersecurity risks from consumer data sharing and urged agencies to implement mechanisms to mitigate such threats.