The Kenyan mobile loans market is dominated by borrowers aged between 31 and fifty years according to a new market report published by a Credit Reference Bureau.
The Credit Reference Bureau (CRB) is a firm that collects information from financial institutions and provides consumer credit information on individual consumers and also hold credit data shared by financial institutions and facilitates credit lending to financial institutions
The report released and prepared by Creditinfo Credit Reference Bureau was conducted to show the analysis in order to add to the body of knowledge in the market and indicate trends for the mobile loans segment which is seven years old and which has revolutionised financial inclusion in Kenya.
The report shows that a vast majority of borrowers, some 66 per cent are averse to borrowing from more than one lender while another 24 percent were found to have borrowed from two lenders, leaving about 10 per cent who venture to more than two lenders.
The Creditinfo Chief Executive Officer, Kamau Kunyiha, at the release of the report on Tuesday in Nairobi, said Kenyans appear to be risk-averse to borrowing from more than two lenders even though the market has more than fifty digital loans products available.
“Our data also shows that the banking sector dominates the mobile lending space by a staggering 93 per cent while the other seven per cent is lent out by digital mobile apps”, said Kunyiha.
Since banks are regulated, the CEO said they can therefore deduce that most of the mobile lending in the Kenyan market is regulated.
“There are a lot of ifs and buts. We based this report on the data supplied to us by lenders in order to eliminate those buts and ifs and begin a trend of information that is backed strictly by data,” said Kunyiha.
CreditInfoCRB, which analysed loans below Sh.50, 000 shows that borrowers aged 25 years and under have the lowest credit scores and are, therefore, lent the least amounts while the credit score improves over time as they grow older.
The analysis constitutes a deep-dive into the data on 19.1 million loans lent to 4.5 million individual borrowers and 855 companies by 15 lenders between November last year and April this year.
A total Sh.112.2 billion was lent by the 15 lenders to their customers in the period under review and over this time, individual borrowers applied for loans 4.5 times on average while companies requested for loans 2.6 times on average.
The report shows that those under 25 are lent an average of Sh.3, 600 while the amount doubles for borrowers who are in the 41-50 age group.
“Young people will often be scored lower since their analytics will show fewer revenue streams and lower money velocity compared with their counterparts in the older demographics who will likely be earning from a salary or a business income,” Kunyiha explained.
However, the CEO noted that customers can improve their credit scores by making payments on their loan obligations on time.
The report further reveals that 65 per cent of mobile loan borrowers are men while the rest of the loan book is taken up by women.
“The market is heavily dominated by men but what we can see today in mobile lending is certainly an improvement. Central Bank has been reporting that digital financial services which do not require traditional forms of security are helping to narrow the gender gap in financial inclusion, said Kunyiha.
The analyzed data runs from November 2018 to April 2019 and constitutes information supplied by lending institutions to CRBs under Central Bank of Kenya rules
By Wangari Ndirangu