A recent report from FSD Kenya indicates that 29 per cent of mobile phone owners in Kenya have borrowed from M-Shwari and there are 49 loan apps in the country.
According to the report, digital credit in Kenya and Tanzania has experienced explosive growth. In Kenya’s digital lending market share, M-Shwari is followed by KCB M-Pesa at twelve per cent, Equity Eazzy at four per cent, Tala at 1.8 per cent, and MCo-op Cash at 1.3 per cent.
On the other hand, ten per cent of mobile phone owners in Tanzania have borrowed from M-Pawa while eight per cent have borrowed from Timiza. Other lenders such as Nivushe hold a six per cent market share while both Branch and Tala control a market share of 0.1 per cent.
The number of Kenyan and Tanzanian mobile phone owners that have borrowed from any digital lender stands at 35 per cent and 21 per cent respectively.
35 per cent of Kenyan digital borrowers use digital credit to meet day-to-day household needs while 37 per cent borrow for business reasons. In Tanzania, 36 per cent of borrowers use digital credit for buying airtime while 37 per cent use it for meeting day-to-day needs.
According to FSD Kenya, digital borrowers are more likely to participate in mobile betting than non-digital borrowers.
Repayment of Loans
In Kenya, 47 per cent of borrowers repaid their loans late compared to 56 per cent in Tanzania while twelve per cent of borrowers defaulted on their loans in Kenya compared to 31 per cent in Tanzania.
20 per cent digital borrowers in Kenya cut down on their food purchases in order to repay loans while 16 per cent borrow money to repay loans. In addition, six per cent skipped paying school fees to repay loans while five per cent and four per cent sold assets and forwent medical treatment respectively to repay loans.
In Kenya, most digital borrowers contact customer care personnel regarding their information at the Credit Reference Bureau while 20 per cent ask about the amount they are eligible for.
In Tanzania 20 per cent of the digital borrowers contact customer care to complain about unexpected charges and fees.
The report also shows that 46 per cent of digital borrowers in Kenya also save digitally while 18 per cent have never saved digitally.