Kenya’s Lending Landscape Sees Increase in Mobile Loans as Overdrafts and Asset Finance Tightens

Transunion has today released their Q1 2024 Kenya Market Analytics Report. The report indicates that the market is resilient despite economic challenges and highlights a surge in mobile loans within the lending landscape, with the volume of new mobile loans opened increasing 11.02% quarter-over-quarter in Q1 2024.

This has come on the back of lenders, equipped with deeper insights and advanced tools thanks to the evolving regulatory environment, becoming better positioned to meet the demands of a dynamic and evolving consumer market.

Some key takeaways from the report include:

• Surge in Mobile Loans: Mobile loans increased by 11.02% quarter-over-quarter (QoQ) in Q1 2024, accounting for 52.79% of all active loan accounts, showing continued consumer preference for mobile lending options despite a 7.48% reduction in the average borrowing limit.
• Decline in Low-Value Overdrafts: Low-value overdrafts, which constitute 32.81% of all active loan accounts, saw a significant 40.29% decrease in new accounts and a 32.57% reduction in the value of these overdrafts, reflecting tightening credit conditions.
• Tightening of High-Value Overdrafts: High-value overdrafts, although a smaller portion of active accounts, showed a 25.3% drop in new accounts and a 17.55% decline in value, suggesting more cautious lending practices.
• Asset Finance Drop with Higher Limits: New asset finance accounts dropped by 27.06%, while the value decreased by 22.78%. However, the average limit for asset finance loans increased by 5.86%.
• Millennials Leading in Credit: Millennials, aged 25-45, were the driving force in several loan categories, including mobile loans and asset finance, highlighting the importance of tailored financial products for younger borrowers.
• Banking Sector’s Dominance: The banking sector maintained its dominance, holding 96% of all loan balances, reaffirming its critical role in Kenya’s credit market despite a slight drop in new accounts opened.
• Macroeconomic Influence: The Central Bank Rate (CBR) was raised to 13%, while the Kenyan Shilling depreciated, impacting the overall lending environment.
• Regulatory and Technological Advancements: The evolving regulatory environment and data contributions from FinTechs provided better market insights, helping lenders make more informed decisions.