Instead of turning to their friends, shopkeepers or banks, tech-savvy Kenyans are borrowing money from firms operating via mobile apps.
The number of the app-based lenders is growing faster in the East African nation as demand and interest in the services grow.
Currently, there are at least four independent mobile app-based lenders in the country namely Mkopo Rahisi, Branch, Pesa Sasa and Saida. The app-based firms offer up to 49 U.S. dollars to borrowers.
“All one needs is to download the app and install in your phone as long as it runs on Android and open an account on the software,” said David Otsieno, who has been using the app for several months.
Once one downloads the app, according to Otsieno, his mobile money transactions with any of the telecoms in Kenya will be audited and one can then start borrowing cash.
“You get the loans in about an hour as long as you carry out frequent mobile money transactions. No security or guarantors needed, just the mobile money details,” he said.
Inventure, the company running Mkopo Rahisi, says it uses real-time credit scoring to get one’s credit worthiness before offering credit. The money is disbursed to the borrower’s mobile money account.
According to Inventure, traditional credit where people visit banks for loans is slowly becoming a tedious option for many people, especially those in need of small amounts of money.
In 2015, the firm says, it gave out over 6,000 loans and more than 75 percent of the borrowers went for a second loan.
The mobile-app lenders are a departure from other mobile-based loan services offered by banks and telecoms, which allow users to save and borrow.
“The only problem with the mobile-app lenders is that their interest rates are higher than those of banks and even telecoms. One pays as much as 20 percent per transaction while the banks and telecoms charge for similar services rates of as low as 5 percent.
But it is assuring when you know you can click on an app in your phone and get money,” said Benson Mbuthia, another user of the service.
“The loans are being offered to Kenyans who need money really fast, beating banks, which can take over a month to issue loans,” said Bernard Mwaso of Edell IT Solution in Nairobi.
He added that despite the high interest rates, the services are becoming popular because of the speedy loans. Enditem