The State of Digital Lending Report in Kenya, research by Reel Analytics was launched on September 1, 2021 showing that in every 100 Kenyan who were polled, 55 had acquired loans from digital lending applications or platforms.
The report noted that the majority of the digital lending platform users are in urban settings at 66 percent, with most digital credit subscribers being of the ages 30 to 34years.
KEPSA CEO Carole Kariuki was represented by Harrison Ngatia the Head of Projects at the event that was attended by media, industry players among other stakeholders. In her speech, CEO Kariuki reiterated the revolutionary impact of digital technology in improving financial inclusion in the country.
“In less than 15 years Kenya has improved its Financial Inclusion from just 26.7 percent to 82.9 percent thanks to increased mobile penetration. This has revolutionized traditional banking with most banks moving to agency banking and mobile wallets. However, due to collateral and other requirements, most borrowers including Small and Medium Enterprises are still unable to access loans from local banks.” She said.
The report shows that most Kenyans preferred digital lending platforms due to convenience, easy access and fast loan remittances. There are a total of 49 digital credit providers operating in Kenya with M-shwari, a product of Safaricom accounting for 29 percent of the local market share. KCB M-Pesa is second at 12 percent followed by Equity Eazzy, Tala and MCo-op Cash at 4, 1.8, and 1.3 percent respectively.
According to FSD Kenya, 35 percent of Kenyan digital borrowers use digital credit to meet day-to-day household needs while 37 percent borrow for business reasons. In supporting the sector, Kariuki said KEPSA has been assisting the Digital Lenders Association of Kenya in building capacity to effectively engage in advocacy on issues facing the sector.
“The Central Bank of Kenya (Amendment) Bill, 2021 remains a key priority for us to ensure better regulation of the sector and weed out unscrupulous dealers as well as borrowers in the digital lending space.” She said.
The recently introduced increase in excise tax and the indirect impact of the Digital Service Tax are some of the priority areas that KEPSA is focusing on through the Public Finance Sector Board, which coordinates all finance sector matters.