12 Reasons why Kenyans borrow from Digital Lenders

27 percent of Kenyans are digital borrowers according to a report released by FSD Kenya with the majority of them borrowing M-Shwari, KCB M-Pesa, Equity Eazzy, Tala and MCo-op Cash.

According to the report, the majority of digital borrowers are borrowing for business purposes at 37 percent followed by day-to-day needs at 35 percent.

20 percent of digital borrowers are using the loans to finance their education while those borrowing for Airtime and paying bills being at 15 and 10 percent respectively.

7 percent of Kenya’s digital borrowers are doing so to pay for medical emergencies with those borrowing to lend to others standing at 4 percent.

The report also indicated that 3 percent of Kenyan digital borrowers are taking loans from one app to pay off another loan from a different app.

Digital lenders have been blamed by the government for aiding betting and gambling but the report indicated that only 3 percent are borrowing for betting purposes.

Kenyans are borrowing from digital lenders for:

• Business
• Day-to-day needs
• Education
• Airtime
• Pay bills
• Personal/household goods
• Medical emergency
• To try it out
• To lend to others
• Repay other non-mobile loans
• Repay other mobile loans
• Betting

Kenya has about 500 digital lenders targeting at least 6 million active digital borrowers. The lenders have been accused of using hiked interest rates to make money out of the desperate borrowers.

Most of the Kenyan digital borrowers are taking loans from more than one digital lenders. Currently, 14 percent of digital borrowers are repaying multiple loans.

Kenya’s digital credit providers have developed different models to score and deliver credit to customers.

The largest players M-Shwari and KCB M-Pesa partnered with the largest telecommunication provider (Safaricom) to score customers and manage loan disbursements and repayments through the M-Pesa platform.