NAIROBI (Xinhua) --
An increase in independent digital
lending apps in Kenya has seen commercial banks in the
East African nation launch similar online platforms to
protect their market.
There are up
to 25 independent mobile lending apps in Kenya, some
unlicensed, which disburse between 0.50 U.S. dollars and
1,000 dollars loans to applicants. Popular apps in Kenya
include Branch and Tala.
million Kenyans are hooked to the mobile loans and half
of them are repeat borrowers, according to latest data
from a joint survey by the Central Bank of Kenya, Kenya
National Bureau of Statistics and FSD-Kenya.
apps charge one-off interest rate of between 7 percent
and 10 percent, with the loans payable per month.
lucrative loan app business has lured banks into the
platforms as they also seek to protect their lending
business, which is facing stiff competition.
Some of the
commercial banks which have been offering loans through
apps in the last two years include Kenya Commercial Bank
(KCB-Mpesa), Equity Bank (Eazzyloan) and Commercial Bank
of Africa (CBA) (Mshwari).
however, are joining the fray with the latest entrant
being Housing Finance Group, which last week unveiled
lender unveiled the app dubbed HF Whizz that will enable
their customers to borrow between 10 dollars and 500 at
a monthly interest rate of 1.1 percent.
will attract a facilitation fee of 6.6 percent, bringing
to total cost of the borrowing to 7.7 percent, which is
same as what the independent loans apps charge.
commercial banks charge between 1.5 percent and 3
percent facilitation fee on top of the 1.1 to 2 percent
per month interest.
customers will also be able to transfer up to 2,000
dollars a day, in addition to making deposits directly
to their bank accounts,” said the bank in a statement.
CBA last week launched a second digital banking platform
that allows the customers to borrow up to 30,000
dollars, the highest among all digital platforms.
Mshwari focuses on small borrowers, the new platform
targets big borrowers who will also be able to get
overdraft of 1,000 dollars.
Bank launched its app in March dubbed Timiza that
enables both customers and non-customers to access quick
Wandera, an economics lecturer noted that banks are
joining the mobile lending fray because the sector is
not subject to stringent Central Bank lending rules.
banks can only charge customers 13.5 percent per annum
on loans, but through apps, this percentage rises to up
to 84 percent per year if the same individual borrowers
cash every month through the platforms. They have no
choice but to ward off the intense competition from the
digital loan service providers,” he said.