Mobile phone based lenders preferred access of credit

By O’brien Kimani

Mobile phone based lenders are fast becoming a preferred avenue of accessing credit for micro and small businesses shunned by commercial banks.

With close to ten mobile phone based lenders offering unsecured loans of up to fifty thousand shillings, many Kenyans are now finding it easier to access credit.

According to face-book linked mobile phone lender branch, they have lent close to 1 billion shillings with default rating standing at less than 1 percent.

Despite the growth of bank accounts in Kenya, millions of people are still locked out of the formal credit system due to strict requirements set out by the lenders.

Data from the Central Bank of Kenya indicates that more than five million Kenyans are still locked out of formal credit.

In the past, those who never qualified for loans in the formal sector resorted to shylocks and chamas, however with the advent of mobile banking, the scene is fast changing.

Kenya has close to 30 million mobile money subscribers who transact on 5 main platforms comprising Safaricom’s M-Pesa, Airtel Money, Orange Money, MobiKash and Tangaza Pesa backed by a network of more than 200,000 agents.

The market has further seen a rise in apps offering unsecured loans through the mobile phone using existing data collected from various platforms.

Mobile based lender Branch Managing Director Daniel Szlapak says due to strict vetting process, the rate of default remains low at less than 10 percent.

The company has partnered with taxi hailing firm Uber to offer loans of up to 30,000 shillings to Uber licensed drivers.

The loan is repayable within six months at an interest rates of 14.5 percent.



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