Kenya: Over 6 Million Kenyans Have Accessed Digital Loans This Year

6 December 2019

Nairobi — Over six million Kenyans have borrowed at least one digital loan for meeting day-to-day household needs and working capital for small enterprises.

This is according to report by FSD Kenya which finds that usage of non-regulated digital credit has grown from 0.6 percent in 2016 to 8.3 percent in 2019.

On the supply-side, Commercial Bank of Africa is now the largest bank in terms of number of deposit account and loan accounts, holding 46.16 percent and 54.8 percent market share respectively.

This is largely on account of its mobile savings and loans product, M-Shwari, which is in collaboration with Safaricom.

According to the report, the digital credit landscape has rapidly changed since the launch of the first product, M-Shwari, in 2012.

Two years passed before the next product, Mkopo Rahisi, later rebranded as Tala, was launched in 2014.

This was followed a year later by two products, KCB M-Pesa and Branch in 2015.

Currently, the largest digital lenders comprise a few banks and financial technology (fintech) companies. However, anecdotal evidence suggests that the scale of the supply-side has expanded beyond these few well-known lenders

Since then, hundreds of new products, mostly mobile apps developed by fintech companies, have emerged.

"In September 2018, the two main app stores had approximately 110 mobile apps provided by 74 unique developers listed as offering digital credit. As at April 2019, 65 of these apps had been pulled down from the app stores, while 47 new ones developed by 43 unique developers had emerged," the report says.

There has also been an unprecedented rise in the number of apps published in 2018, from 14 in 2017 to 49 in 2018.

Most of these apps have less than 10,000 downloads from the two main App Stores.

Two lenders, Tala and Branch, had more than one million downloads each as of March 2019. Two other apps had between 500,000 to one million downloads.

There are relatively unknown lenders with download numbers as high as those of well known mainstream lenders. However, the download numbers are not necessarily a reflection of the borrower base.

Demand-side research has revealed that Branch, Eazzy loan, M-Coop Cash and Tala are the most popular app-based digital lending products in the market.

"These numbers demonstrate how easy it is to enter, and indeed, exit the market."

The report comes amidst of long running debates on the cost of digital credit, with a comparison of the annualized percentage rates of digital credit products revealing potential consumer protection concerns.

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