Mobile Loan Apps In Kenya - Discover, Explore, and Connect With Kenya

The advent of mobile loans has significantly increased access to finance in Kenya. You should only be over 18 and able to demonstrate both financial responsibility and a verifiable mobile phone account with a service provider.

The number of Kenyans taking out mobile loans has skyrocketed from a low of 200,000 in 2020 to as high as 3.8 million by the end of 2023, according to data from the central bank of Kenya. This demonstrates the pervasiveness of mobile loans and the importance they play in the daily lives of ordinary Kenyans.

By the end of 2023, Kenyans will have borrowed over Ksh50,6 billion.

The rising popularity of mobile loans has come at a price, however, as the interest rates can reach 520% each year. High rates of default have resulted from this. After a borrower defaults on a mobile loan, many lenders report them to credit reporting agencies (CRBs).

Contents

1 How Common Are Mobile Loan Applications In Kenya?
2 Who Are The Mobile Loan Providers In Kenya?
3 Conclusion

How Common Are Mobile Loan Applications In Kenya?

The majority of Kenyans now need to rely on mobile loans just to get by, and this is a problem that has only worsened since the introduction of covid-19. The Africa Report has found that:

Most Kenyans (82.4%) are open to further use of digital loans for business and stock market investments.
For 62% of these borrowers, online lenders come first, followed by relatives and family.
Many organizations and households are finding that they can pay their bills on time with the help of digital loans.
According to the study, the top three uses for a credit of KSh10,000 to KSh100,000 are (1) investing in a business (2) funding one’s children’s education (3) purchasing food for one’s family.

Over the course of two months (October and November), 2021, we surveyed over a thousand borrowers of digital loans.

However, borrowers have been hit with skyrocketing interest rates of up to 520 percent per year thanks to the proliferation of lenders, leading to a rising tide of defaults and an increasing number of defaulters. As of June of 2021, 14 million Kenyans were blacklisted by the CRBs. As a result, the government stopped publishing the names of people whose loans were less than Ksh5 million that had gone into default.

Who Are The Mobile Loan Providers In Kenya?

When it comes to mobile loan providers, we can divide the players into three broad categories.

1. Telecommunication Providers

Here Safaricom is leading the fray with the following loan products:

Fuliza Offered in conjunction with NCBA bank
M-shwari offered in conjunction with NCBA bank
KCB M-pesa offered in conjunction with KCB bank

2. Bank Mobile Loans

Here we have ordinary banks offering mobile loans to their users. The banks have gone ahead to enable one to open a bank account using a mobile phone and access the loans. They are as follows:

Timiza loan app by ABSA Bank
PrimeKopa app by Prime bank
PesaPap app by Family Bank
NCBA Loop app by NCBA bank
HF Whizz by Housing Finance bank
Eazzy App by Equity Bank
KCB Vooma Loan by KCB Bank
MCo-Op Cash by Co-operative Bank
M-FANISI by Maisha Microfinance Bank
MyConso App from Consolidated Bank of Kenya
Musoni Mobile by Musoni Microfinance

3. Loan Apps Providers

Mobile app loans are more common than bank-issued loans on smartphones. The reason is that many apps don’t have rigorous application and vetting procedures.

Unfortunately, most of these lending platforms charge extremely high-interest rates, making it difficult, if not impossible, to repay the loans.

The Kenyan government has made it illegal for these applications to provide CRBs with lists of defaulters. There were more than a hundred loan applications in Kenya as of 2022. Not all of them are listed here, but some of them are:

Conclusion

When you’re in a jam and need quick cash, Kenya’s plethora of loan applications gives you plenty of options. The interest rates on these loans are high, but the repayment arrangements may be more favorable than those offered by banks. It’s really exploitative if it’s 500% a year or more.

Apps don’t come out and say this, but it’s there in plain sight: interest is calculated solely on the days you really have the loan. Even though the days are very brief, the annualized cost might be rather high.

An app that lends you Ksh1,000 and requires repayment within 30 days may advertise that it only charges 16% in interest and a processing fee of Ksh40. What they don’t tell you is that the interest rate for the first year is 192%.

You can save money by applying for a mobile loan through a bank rather than an app.