A look at digital credit in Kenya and why access alone is not enough

SAN FRANCISCO — In addition to working at a hospital in Nairobi, Kenya, Grace is a clothing entrepreneur. She uses a mobile app to take out loans that help her keep the business running. “My customers usually don’t pay for the clothes immediately, so I usually borrow to ensure I can go to the market and buy goods for sale as I wait for payment,” Grace said, who used a loan from Tala to start her clothing business which provides her with additional income outside her work at the hospital. Grace is one of the customers featured in Tala’s new impact report, Based

Digital lending apps are coming under scrutiny in East Africa for predatory practices

The uptake of digital lending has been on the rise across Kenya, boosted by growing smartphone adoption and the availability of mobile money transfer systems like M-Pesa. With quick application turnaround, digital credit has helped borrowers pay for basic necessities like food and rent and access working capital for their enterprises. Yet increasingly, digital lending in Kenya—and across East Africa—has come under scrutiny, criticized as a “catastrophic” industry that’s pushing tens of thousands of users into debt, while commodifying their data and gaining profits from their woes. The latest challenge comes from Google, which has updated its app store developer policies to

UK to partner with Kenyan Fintech companies to increase financial inclusion

The Lord Mayor of the City of London Peter Estlin, announced £10 million of UK Aid support towards the Catalyst Fund during a visit to Nairobi. His visit comes ahead of the first UK-Africa Investment Summit next year, which will bring together businesses, governments and international institutions to encourage investment in a range of sectors, including fintech. The Catalyst Fund supports business development and investor opportunities for early stage fintech companies in emerging markets. With support from the UK Department for International Development, the Catalyst Fund will help connect a further 30 local fintech companies with international investors and mentors, including Kenyan

Digital Credit – The most pressing problem in Kenyan credit markets – Really?

The focus on the potential and real risks of digital credit, while commendable, runs the risk of taking our collective eye off the wider credit market, which has a much more significant impact on Kenya’s economy. Recently there was a huge fuss about forest fires burning in the Amazon Jungle. Suddenly, the world seemed at the edge of a precipice as our “lungs” of the world seemed on the verge of extinction.  Imagine the producer of much of the oxygen we breathe going up in smoke!  Before I had a chance to get bothered under the skin about this, I

Mobile-based lending is huge in Kenya: but there’s a downside too

Over the past 10 years mobile-based lending has grown in Kenya. Some estimates put the number of mobile lending platforms at 49. The industry is largely unregulated but includes major financial players. Banks such as Kenya Commercial Bank, Commercial Bank of Africa, Equity Bank and Coop Bank offer instant mobile loans. These lending services have been made possible by the ballooning financial technology (fintech) industry. Since the early 2000s, Kenya has been touted as a centre of technological innovation from which novel financial offerings have emerged. Mobile company Safaricom’s M-Pesa is a well-known example. It is no surprise, therefore, that technology and unregulated lending have developed together