A report released by Tala Kenya shows that their customers are well educated with higher incomes than the typical microfinance client.
“They are between 25-34 in age and part of the emerging middle class, earning $2-$19 (Ksh 200 – Ksh 1900) per day. Most are steadily employed or entrepreneurs with small or micro-businesses,” reads part of the Tala’s Impact Study that sought to assess their impact in two categories: immediate impact and long-term impact.
The study found out that close to 90% of their customers experienced significant unexpected financial expenses in the past year, with 34% having more than one. “The most common cases were business difficulties and emergencies with family and friends.”
“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, one of the customers featured in Tala’s impact report.
“Unstable income affects both entrepreneurs and salaried employees in Kenya. Living with uncertainty, the majority of Tala’s users have become active money managers with monthly budgets,” the report adds
Tala whose mission is to deliver financial access to more underserved consumers around the world noted that its Kenyan customers in the lowest income brackets are the most likely to budget and monitor their spending regularly.
Read: PayPal Invests in Tala Advancing Its Financial Access to People
Going forward, the mobile credit lender says, “There is an opportunity to explore adding broader financial education into our product, which could not only help raise the overall financial health of our customers but also help mitigate the chances of customers becoming over-indebted from simultaneously taking out loans with multiple lenders.”
Tala conducted a baseline survey with 795 randomly selected Tala customers, and a follow-up survey two months later with 277 customers of the original sample, both distributed by income, gender, livelihood, and how many loans they had taken at Tala. They then analyzed mobile data from randomly selected 1,000 customers.
Tala now operates in Kenya, Tanzania, Mexico, and the Philippines, with a pilot India.
In Kenya, Kshs 3.4 tn was transacted via mobile cash in 2016 compared to Kshs 2.8 tn in 2015 due to the rise in the number of mobile lending apps. Kenyans, in particular, small and micro-entrepreneurs, are increasingly turning to these mobile lending solutions to access digital micro-loans mainly for short-term working capital.
The continued increase in investments and funding of mobile lending apps is in a bid to grow the institutions loan books and aid in their expansion.
In 2017, USD 200.0 mn (Kshs 20.3 bn) was raised for Fintech businesses in East Africa, of which 98% of funds raised went to Kenyan companies.
This is an indicator of the positive investor sentiment in the sector. We expect the demand for mobile loans to increase and this will be driven by; (i) rapid growth of smartphone adoption in the African market with Kenya surpassing 40 mn mobile subscriptions in 2017, (ii) affinity for mobile money in Kenya as 60% of Kenyans have a mobile banking account and receive 90% of remittances through a mobile device, (iii) the convenience and accessibility to these loans that have a fast processing time, no paperwork or collateral and no late or rollover fees and, (iv) Kenyan banks hesitance to lend to smaller, untested businesses, due to the interest rate cap.
Last sections via Cytonn Investments.