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Digital Mobile Lenders in Kenya adopts New Strategy to Remain Afloat

Digital lenders in Kenya have devised a new strategy of doing business, after Central Bank of Kenya barred them from submitting credit reports to credit reverence bureaus (CRB).They have opted to offer their services to a few customers with good credit reputation.
Mobile lenders decided to cut down their services to avoid high risk. The Chairman of Digital Lenders Association of Kenya (DLAK) Kevin Mutiso stated: “We stopped lending in March through April and May but we had to make decisions so we wrote off all bad loans.”
Mutiso added that they were “only lending to the best customers who understand that the money they are borrowing have to be repaid. Most individuals initially were borrowing with no intention to pay back.”
Central Bank of Kenya (CBK) precluded mobile lenders from forwarding names of defaulters to CRB due to what it termed as ‘unregulated and predatory in their lending approach.” According to Business Insider Africa, around 90% of loan defaulters in Kenya are those who borrowed money from digital lenders.
The removal of digital lenders from accessing CRB exposed them to more risks resulting from bad debts, hence the decision to scale down their markets. Parliament is on process of passing a bill that will root out predatory lending.
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