Borrowers flock back to digital loans to survive

 

Tough economic times locally and globally has pushed more borrowers back to digital lenders, latest industry trends show.

Digital lenders recorded increased numbers this year with Tala, revealing that in the first six months of this year, it gained more than 800,000 new customers.

This is a 114 per cent jump compared to the first half of 2022, driving the t lender's reach to eight million customers in Kenya, Mexico, Phillippines and India.

Tala founder and CEO Shivani Siroya, says that the eight million customers are accessing more than $3 million (Sh426 million) daily.

Even though latest figures for the Kenyan market were not availed, data released in March year shows Tala had lent Sh239.8 billion since it began operations in Kenya in 2014.

“Our success and customer growth has proven this out, with more people using our global platform to manage their daily lives and fund new ideas, businesses and innovations - allowing more people to fully participate in the global economy,” said Siroya.

Locally the renewed appetite for loans has seen more than 400 digital credit providers seek licenses to operate in Kenya, according to the Central bank of Kenya.

So far official data shows that the regulator has licensed 32 digital lenders to operate in the country.

Lending has shifted to the digital space in the last decade so is borrowing patterns in the country, which has seen millions of borrowers turn to mobile apps for quick loans, albeit high-interest rates in some. 

The high interest rates led to increased defaults in 2021 forcing CBK, through a presidential directive to unveil a framework to reduce the load.

This saw at least 4.2 million Kenyans who were unable to pay $246 million (Sh35 billion) in digital loans from banks, microfinance organisations, and mortgage-financing firms receive a relief.

Tala says that more than two billion people around the world are underserved by the formal financial system and operating in a largely cash-based informal economy.   BY THE STAR