Kenyans transacted Sh3.35 trillion through mobile cash in 2016 compared to Sh2.82 trillion the previous year due to an increase in mobile loans apps, the latest data from the Central Bank shows.
This means that Kenyans transacted an average of Sh280 billion in real-time mobile-based payments per month, or Sh9.2 billion a day last year — compared to the Sh7.7 billion moved daily through mobile money in the full year of 2015.
Mobile banking apps such as MShwari, Equitel, M-Co-op Cash and KCB MPesa have transformed how Kenyans access loans administration with prolonged paperwork, collateral demands or vetting by credit officers.
Other mobile loans apps such as Branch, Tala, Saida and Mombo Mobile, offer short-term loans via mobile money and charge only a small processing fee.
More Kenyans are projected to go for loans from mobile channels in light of the interest rate caps, which in effect is fight back lending to small entrepreneurs considered risky borrowers.
“We expect to record an increase in mobile credit lending driven by accessibility of the loans, high demand from the middle income population, instant loans that take five minutes to process unlike long approval processes in traditional banking methods,” Cytonn said in a research note.
Mobile money has progressed to become a loan payout tool, adding to other uses such as peer transfers, betting, paying for shopping, utility bills (water, rent and electricity), school fees, and receiving dividends.
Branch, a Facebook-linked mobile app that allows users to borrow and repay micro-loans via mobile money platform MPesa said it has a loan book of Sh2 billion.
The average loan size is now at $35 (Sh3,500) and the app has 180,000 customers in Kenya, processing about 3,000 loans daily priced at between six per cent and 12 per cent depending on size and repayment period.
Tala, previously known as Mkopo Rahisi, said it has disbursed more than 900,000 loans in the past year to have its loan book at Sh3.5 billion.
The app’s co-founder Shivani Siroya said Tala’s average loan size is $37 (Sh3,700) in Kenya, with an approval rate of about 60 per cent.
The loan fee ranges between 11-15 per cent.
CBA currently disburses an average of 70,000 loans via MShwari, with the average credit size being Sh3,300.
This loan facility is only available to MPesa subscribers and attracts a facility fee of 7.5 per cent charged on the amount borrowed which must be repaid within 30 days.
Equity-backed Equitel mobile money processed loans worth Sh20.8 billion as at September 2016, the lender said in its quarter three update.
KCB Group said mobile loans applications now stand at 80,000 a day and that its MPesa loan book stands at Sh17 billion, a fourfold growth from Sh4.3 billion in September 2015.