Majority of Kenyans place digital lending platforms top on their priority list of credit sources to fund the growth of small businesses, a new report shows.
The State of Digital Lending in Kenya Report 2021, released today by consumer intelligence firm ReelAnalytics, shows that in the absence of digital lending platforms, most Kenyans would seek business growth loans from sources such as close family members.
Borrowing within family circles is however considered less convenient as loan accessibility is usually unpredictable and amounts smaller compared to official sources like digital lenders.
“A majority (over 60percent) of customers are satisfied with the services of digital lenders and that there really aren’t strong formal or institutional alternatives to digital lenders,” says the report.
Forty percent of Kenyans interviewed in the report said they would borrow from relatives as their prime alternative to digital lenders compared to just 10 percent who would opt for banks and Saccos.
M-Shwari is the most popular among five key digital lending platforms, influenced by its connection to the leading mobile service provider in the country (Safaricom) at 40 percent score followed by Tala (36 percent), Fuliza (30 percent) Branch (23 percent) and KCB-Mpesa at 22 percent.
Safaricom’s overdraft facility, Fuliza was ranked as the most subscribed and most used over the last three months followed by M-Shwari. Most of the users of these fintech services are those in self-employment and those employed in the informal sector.
Other popular lenders are Zenka, Eazzy loan, Timiza, MCo-op Cash, Okolea, and Kopa Cash.
“Majority of Kenyans prefer digital lending platforms due to their convenience and easy access of loans compared to the acquisition of loans from other credit service providers such as banks, SACCOs among others,” says the report.
Majority of Kenyans (92 percent) interviewed in the report said interest rates charged by digital lenders was not a factor limiting their access to credit. Key factors under consideration for most Kenyans were ease of access (39 percent) and speed of disbursement (22 percent).
The survey of 1,000 Kenyans across eight counties shows Nairobi, Mombasa, and Nakuru having the most active users with at least 57 percent seeking digital credit from time to time.
An average of 48 percent of residents in Nyeri, Meru, Eldoret, Kisumu, and Embu have borrowed from one or more digital lenders.
Nationally, males dominate digital lending at 59 percent due to multiple use of digital lending platforms followed by women at 41 percent. Women have been considered as more ‘loyal’ and ‘default concerned’ borrowers.
While the rate of uptake was high among the employed, absolute numbers of self-employed people taking digital credit were higher.
“All top digital lending platforms popularity and usage are highest among self-employed Kenyans between 30-34 years,” according to the report.
Majority of Kenyans are not acquiring loans from digital lenders (24percent) mainly due to a lack of knowledge about these platforms/services or a lack of interest in the platforms (23 percent).