Loans disbursed through digital mobile lenders in Kenya hit Ksh.500 billion mark in eight years to 2023, with nearly four out of ten Kenyans going for mobile loans every day, highlighting the growing prevalence of app-based borrowing use in the country.
This was revealed during the rebranding of the Digital Lenders Association of Kenya (DLAK) to Digital Financial Services Association of Kenya (DFSAK) during the Digital Finance Summit 2023 at a hotel in Nairobi on March 15, 2023.
The rebrand comes against the backdrop of ongoing regulatory approval of the digital lenders, which according to DFSAK Chairman Kevin Mutiso, has opened a new window for the lenders to deepen their financial inclusion.
It is also a strategic bid to deepen financial inclusion by bringing together more players in the financial services ecosystem and being more responsive to dynamic customer needs.
“With a robust regulatory environment and increasing consumer interest, we expect the sector to keep deepening financial inclusion in the coming years,” said Mutiso.
Also present during the rebrand was Molo Member of Parliament Francis Kimani Kuria – Chairman of the Parliamentary Committee on Finance and Planning.
According to Metropol CRB Chief Executive Officer Gideon Kipyakwai, more than 8 million Kenyans have benefitted from affordable mobile micro-loans “to lift households out of poverty as well power up businesses, with an estimated 70% of borrowers borrowing for business reasons.”
A vibrant tech ecosystem and opening up of Africa’s digital economy are now seen creating more opportunities for Medium-Small and Micro Enterprises (MSMEs) that are increasingly hopping into digital and social media platforms to acquire customers and new markets.
“We foresee demand for mobile credit rising as small local businesses turn to online marketing platforms and seek growth funds beyond borders,” Mutiso said
Digital services are projected to add an extra Ksh.23.3 trillion ($180 billion) to Africa’s GDP by 2025, according to the United Nations Conference on Trade and Development (UNCTAD).
The UNCTAD projection coincides with the near doubling of Kenya’s Fintech Start-Ups totaling Ksh.74.4 billion ($574.8 million) in 2022 from Ksh.37.7 billion ($292 million) in 2021.
DFSAK would now bank on positive market sentiments to rack up more funding towards onward lending to the growing customer numbers, develop new digital financial services such as digital insurance, digital savings plan and digital investment platforms while bolstering financial literacy levels and overseeing licensing of more providers.
“In the next phase, the Association is looking to overturn the shortfalls experienced in the last eight years including harmful debt collection practices still prevalent even as licensing continues,” added Mutiso.
DFSAK is, however, faced with slow-paced regulatory approval among some of its members by the Central Bank of Kenya (CBK), with only 22 out of over 400 lenders having received a nod to operate in the Kenyan market.
Licensing of Digital Credit Providers is slow-paced, with the Central Bank of Kenya (CBK) having approved a mere 22 lenders out of over 400 lenders in the country.