Listen to This Article Enhance your reading experience by listening to this article.

Kenyan men dominate the borrowing market in terms of volume, taking out 61.4 per cent of the total number of loans, most recent credit market study says.

Men also account for 71.1 per cent of the total loan value issued between 2019 and 2023, says the report analyzing data from Creditinfo CRB.

In contrast, female borrowers demonstrate superior repayment histories, making up only 36 per cent of new negative listings over the same five-year period, compared to 64 per cent for men.

A significant reduction in negative credit listings was noted, having dropped from over 2.2 million to 933,551 individuals between 2019 and 2023.

Jared Getenga, the chief executive of CIS Kenya, highlighted a surge in the number of unique borrowers and a shift towards digital loans.

Unique borrowers are those with at least one loan from a lending institution in a specific year.

Unique borrowers soar

“The number of unique borrowers has been on a steady increase on an annual basis, with 7.5 million unique borrowers in 2019 compared to 11.4 million unique borrowers in 2023,” Getenga said.

Despite the decline in listings, the number of unique borrowers increased steadily. Notably, 6 million of these borrowers are men, while 4.3 million are women, emphasizing the gender disparity in borrowing.

Digital loans have become a cornerstone of Kenya’s credit market, with approximately 10 million unique borrowers accessing at least one digital loan annually, compared to 1 million who take out non-digital loans.

Over the five-year period of the study, around 270 million new digital loans valued at Sh1.512 trillion were issued, dwarfing the 7.8 million non-digital loans valued at Sh8.282 trillion. The average value of non-digital loans has declined by 45 per cent, from Sh8,353 in 2019 to Sh 4,555 in 2023.

A large proportion of borrowers with negative records have outstanding loan balances between Sh 1,001 and Sh5,000.

Many borrowers manage to fully repay their loans within seven months to a year, with 69 per cent of those previously having negative records being issued new loans. This challenges the public perception that the Credit Information Sharing (CIS) mechanism is primarily a blacklisting tool.

The report underscores the dominance of banks in the retail lending market, with banks accounting for over 90 per cent of the volume and value of both digital and non-digital loans. Despite the increase in unique borrowers, the aggregate value of loans disbursed annually has declined, from Sh 2.067 trillion in 2019 to Sh 1.937 trillion in 2023.

Financial sector deepening

The study, which was conducted by Financial Sector Deepening (FSD) Kenya, the Credit Information Sharing Association of Kenya (CIS Kenya), and Creditinfo Credit Reference Bureau Kenya Limited, aims to inform market development and policy interventions to enhance the flow of productive credit in Kenya’s economy.

Kamau Kunyiha, Regional Manager of Creditinfo CRB, highlighted the evolution of the CIS mechanism in Kenya from negative-only reporting to comprehensive full-file reporting.

“The expectation is that the study will provide the basis for engagement with various stakeholders on the development of Kenya’s credit market, long-term policy implications, and the functioning of Kenya’s Credit Information Sharing mechanism.”, said Francis Gwer, FSD Kenya’s Senior policy specialist.