Survey: Digital credit demand set to jump in post-Covid era
Digital lending is projected to emerge stronger in the post pandemic era, according to Digital Lenders Association of Kenya (DLAK).
The association in its Status of Digital Lending in Kenya attributes the likely surge in the usage of digital credit to the growing number of Kenyans choosing to use such platforms for their daily transactions.
Further, DLAK expects the 92 per cent of Kenyans who don’t see high interest rates charged by digital lenders as a factor, to increase in the post Coronavirus period. It is estimated that just 8 per cent of Kenyans consider high interest charged as a factor when borrowing.
“Twelve per cent of the respondents said low interest rates charged by some of the digital credit providers is their motivating factor to the continued usage of these platforms; KCB M-Pesa and M-Shwari were some of the providers mentioned to have low interest rates,” the survey finding read in part.
According to a report by FSD Kenya, the country has experienced an explosive growth in digital credit services since the launch of M-Shwari in 2012.
Business reasons
The report estimates that 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 – a trend digital lending firms are hopeful will sustain even after the virus is contained amid successful innoculation drive by the Ministry of Health.
There are a total of 49 digital credit providers operating in Kenya with M-Shwari accounting for 29 per cent of the local market share, followed by KCB M-Pesa at 12 per cent, then Equity Eazzy, Tala and MCo-op Cash at 4 percent, 1.8 per cent and 1.3 percent respectively.
The sector is also expected to witness an increase in micro-credit especially among small traders who prefer such apps for their regular business transactions with customers, according to Duncan Motanya (pictured), the chief executive of Zenka, a digital lending firm.
“We are already seeing adjustments in the industry, which gives us hope as operators in this space. Availability, affordability and convenience in terms of repayment of such loans will play a crucial role in the sector’s growth,” he said in an interview.
