Top lenders in Kenya have turning to cut digital lending to customers in the wake of non-payment of loans following the year freeze of listing defaulters with credit reference bureaus (CRBs).
NCBA, KCB Group, Equity bank all reported during their Q3 report that they had slowed the uptake of digital loans due to the high rate of defaults following the listing freeze between April and the end of September 2020.
The Central Bank of Kenya initially offered the listing relief as part of the Covid-19 measures to cushion Kenyans against the pandemic’s economic effects.
In a statement from its Chief Executive Officer, Joshua Oigara, KCB Group reported that its digital platforms such as KCB MPESA had cut its loan portfolio by half from kshs 10 billion a month to Kshs 5 billion.
Mr. Joshua Oigara said that customers were not motivated to repay their digital loans since there was no listing contributing to reducing lending by the top lender.
The non-performing mobile loans level increased from 2% to 15% in Q2 and Q3 of 2020.
Similarly, M-Shwari Loans’ value dropped by 14 percent to Kshs 47.5 billion, while KCB Mpesa declined by 60.1 percent to Kshs 27.3 billion.
The tightened rules saw a surge in Safaricom’s Fuliza loans by 33.1 percent to Kshs 149.4 billion during Q3 of 2020.
Safaricom’s Fuliza product is underwritten by both NCBA Group and KCB Group and charges customers a one-off 1.083% and daily administrative fee on the outstanding balance.
Equity’s CEO James Mwangi has also reported that the lender had to tighten its digital loan portfolio due to increased default rates and non-performing loans due to the Covid-19 pandemic.