NAIROBI (Xinhua) --
Firms in Kenya lending money through mobile
phones have registered a roaring success as more and more
citizens choose to borrow via such a channel.
citizens are currently hooked to the service borrowing from as
low as one dollar a day, and banks and telecoms are reaping
big from the service.
showed that about 90 percent of loans in the East African
nation are currently disbursed via mobile phones by commercial
banks and telecoms.
Most of those
borrowing are both low and middle income earners taking
between 30 U.S. dollars and 200 dollars per borrowing,
especially during the weekend, at an average of 8 percent.
Commercial Bank of
Africa (CBA), which partnered with leading telecom Safaricom
to pioneer M-Shwari, the first mobile phone loan service, is
among financial institutions that have recorded great success.
The bank’s virtual
lending platform, which is now five years old, has 18 million
customers, an indication of the popularity of the service.
The east African
nation has some 30 million mobile money subscribers, which
means M-Shwari has amassed over half of them in just five
The bank noted
that it disburses up to 72 million U.S. dollars a month, the
highest in the East African nation, at 7.5 percent per loan.
cumulative loans issued under M-Shwari stood at 72 million
dollars per month as at March compared to 62 million dollars
per month in March 2016,” said CBA in a statement on
As at March, the
bank noted, registered customers of the platform stood at 18.3
million compared to 14 million in the same period last year.
With the huge
number of customers, the mobile platform has made CBA the
biggest bank in Kenya by customer base.
“We would mark M-Shwari’s
fifth anniversary by announcing some product enhancements
geared at deepening financial inclusion further, and reward
customers for their loyalty,” said CBA, with its loan book
standing at over 281 million dollars.
Equity Bank is
another lender whose fortunes have risen thanks to mobile
phone lending. Chief Executive James Mwangi recently announced
that 82 percent of loans the bank disburses are through the
Since starting its
mobile lending service Equitel in 2014, Mwangi said the
platform has so far issued loans worth 550 million dollars.
A total of 7.5
million loan requests have been processed, with eight out of
every 10 loan demands disbursed via Equitel. Average loan size
stands at 82 dollars as at June compared to 39 dollars in June
loans start from one dollar and are charged a capped interest
rate of 14 percent per annum, or 1.16 percent per month with
repayment period limited to a year.
For KCB, 91
percent of its total loans are processed via mobile platform,
with requests standing at 80,000 daily. Its total customers
have risen to about 10 million, with more than half via the
Besides banks, the
success of mobile lending has showered business opportunities
on lending apps.
Branch, Tala, Saida and Mombo Mobile, and like the banks, they
issue short-term loans via mobile money and charge a
processing fee. In July, Facebook-linked Branch said it had
disbursed 35 million dollars since launching in Kenya in April
of collateral and even habits are responsible for the faster
growth of mobile lending and banks are really cashing in on
it. The product is among the most successful for banks in
recent times as the business environment changes for the
institutions,” said Ernest Manuyo, a business management
lecturer in Nairobi.
In fact, according
to Manuyo, with the products, banks have found a way of
beating the law that capped lending rates at 4 percent above
Central Bank rate, currently at 10 percent as they charge
between 7 and 10 percent one-off rate.