Kenyans lead the world in the use of mobile money-based app loans

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Kenyans lead the world in the use of mobile money-based app loans


Almost four in 10 Kenyans have used mobile money to get a loan, the highest number in the world. FILE PHOTO | NMG

Summary

  • Nearly four in 10 Kenyans have used mobile money to get a loan, the highest number in the world, according to a new report, highlighting the growing prevalence of app-based borrowing usage in the country.
  • This signals the popularity of mobile lending as well as the growth of credit providers, including banks and alternative lenders that are expanding into the consumer lending space.

Nearly four in 10 Kenyans have used mobile money to get a loan, the highest number in the world, according to a new report, highlighting the growing prevalence of app-based borrowing usage in the country.

The report by the international association of mobile network operators GSMA shows that 36% of Kenyans took out loans through their phones in 2021.

This signals the popularity of mobile lending as well as the growth of credit providers, including banks and alternative lenders that are expanding into the consumer lending space.

“There is generally greater use of loans in markets with higher mobile money prevalence, particularly in Kenya (36%). India (18%) and Pakistan (16%) are the exception – although both countries have low to medium mobile money prevalence, loan take-up is still relatively high,” the report reads in part.

Popular mobile lending platforms include M-Shwari, Tala, Fuliza, Branch, KCB M-Pesa and Zenka.

Since the onset of Covid-19, the percentage of Kenyans who used mobile money more frequently to obtain loans was 32%, 39% less often while 28% remained unchanged; their loan acquisition remained the same and was unaffected by the pandemic.

“In a separate study highlighting the actual use of mobile credit, analysis of anonymized transactional data from M-Pesa in Kenya found that approximately 50% of customer accounts were using financial services such as credit,” says part of the report.

Over the years, mobile money has become a lucrative source of revenue for telecom operators and credit providers, as customers use them to send money, pay for goods and services, and take out credit from short term.

In Kenya, the total number of registered mobile money accounts stands at 67.94 million as of February 2022, according to official data from the Central Bank of Kenya.

Transactions performed on mobile money providers include paying for products and services, taking out loans, opening savings accounts, paying for government services, and betting, among others.

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