The volume of cash moved through mobile money transfer platforms grew by a fifth last year to cross the Sh3 trillion mark for the first time, aided by increased uptake of mobile loans, official data shows.
Kenyans moved Sh3.35 trillion via mobile cash in the full year of 2016 compared to Sh2.82 trillion the previous year, according to latest data from the Central Bank of Kenya, amid a rise in number of mobile lending apps.
This means that Kenyans transacted an average of Sh280 billion in real-time mobile-based payments per month, or Sh9.2 billion a day last year – compared to the Sh7.7 billion moved daily through the same platform in the full year of 2015.
Mobile banking apps such as M-Shwari, Equitel, M-Co-op Cash, and KCB M-Pesa have greatly transformed how Kenyans access loans, and consumers no longer need to fill lengthy paperwork, pledge collateral or undergo vetting by a mean looking credit officer.
There are also standalone mobile lending apps such as Branch, Tala, Saida and Mombo Mobile, which also issue short-term loans via mobile money and charge a processing fee.
Analysts at Cytonn Investments said they project growth in uptake of loans from mobile channels in light of the interest rate caps, which has stifled lending to small entrepreneurs who are now seen as risky borrowers.
“We expect to record an increase in mobile credit lending driven by: accessibility of the loans, high demand from the middle income population, instant loans that take five minutes unlike long approval processes in traditional banking methods,” Cytonn said in a research note.
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Mobile money has evolved to become a loan disbursement tool, adding to other uses such as peer transfers, betting, as paying for shopping, utility bills (water, rent and electricity), school fees, and receiving dividends.
Branch, a Facebook-linked mobile app that allows users borrow and repay micro-loans via mobile money platform M-Pesa, said it has a loan book of Sh2 billion.
The average loan size is now at $35 (Sh3,500) and the app has 180,000 customers in Kenya, processing about 3,000 loans daily priced at between six per cent and 12 per cent depending on size and repayment period.
Tala, previously known as Mkopo Rahisi, said it has disbursed more than 900,000 loans in the past year to have its loan book at Sh3.5 billion.
The app’s co-founder Shivani Siroya said Tala’s average loan size is $37 (Sh3,700) in Kenya, with a loan approval rate of about 60 per cent. Tala’s loan fee ranges between 11-15 per cent.
Commercial Bank of Africa currently disburses an average of 70,000 loans via M-Shwari, with the average credit size being Sh3,300.
This loan facility is only available to M-Pesa subscribers and attracts a facility fee of 7.5 per cent charged on the amount borrowed, which must be repaid within 30 days.
Quarter three update
Equity-backed Equitel mobile money processed loans worth Sh20.8 billion as at September 2016, the lender said in its quarter three update.
KCB Group said mobile loans applications now stand at 80,000 a day, with KCB M-Pesa loan book standing at Sh17 billion, a fourfold growth from Sh4.3 billion in September 2015.
Co-op Bank’s M-Co-op Cash reported a loan book of Sh3 billion as at June 2016.
The Communications Authority of Kenya says in its latest industry report that growth of mobile money has also “enhanced digital financial inclusion.”