Mobile loans has remained the most common form of credit in Kenya, accounting for 52.79% of all active loan accounts with a total balance of Ksh. 158.8B according to a new report by TransUnion Kenya. The first quarter of 2024 saw the opening of 3.92M new mobile loan accounts, an 11.02% increase from the previous quarter. However, the average quarterly borrowing limit per borrower decreased by 7.48% from Ksh. 16.86K to Ksh. 15.6K, indicating a measured approach by both lenders and borrowers in the first quarter’s economic climate.
The evolving regulatory environment played a role in contributing to more people applying for mobile loans, with licensed FinTechs now submitting data to TransUnion.
Low-value overdrafts (ODs), the lifeblood of accessible credit in the Kenyan market, represented a significant 32.81% of all active loan accounts, with over 9.84M active accounts holding a balance of Ksh. 34.69B at the end of Q1 2024. The first quarter 2024 dip in low-value ODs originations saw the volume of new accounts opened retracting to 5.36M, a 40.29% decrease from the 8.97M in the previous quarter.
There was also a 32.57% drop in the value of new, low-value ODs booked to KES 4.5B from the previous quarter’s KES 6.68B. The average quarterly limit increased by 12.93% from KES 745 to KES 818.The quarter marked a contraction in unique borrowers of low-value ODs to approximately 7.60M from 8.02M (-5.14%) the previous quarter.
High-value ODs, while comprising a small percentage (1.89%) of all active loan accounts, held a significant balance of Ksh. 499.1B. The first quarter of 2024 saw a 25.3% reduction in the number of new high-value overdraft accounts, with the value of these overdrafts decreasing by 17.55% to Ksh. 29.36B. This trend suggests tighter credit conditions and more selective lending practices in this segment.
The banking sector remained the backbone of Kenya’s credit market and held more than 96% of all loan balances, accounting for 27.18M active accounts. Even though there was a slight decline in the number of new accounts opened, the sector’s dominance underscores its critical role in providing credit to both consumers and businesses.
Asset finance is a niche product and comprised 0.32% of all active loan accounts in Q1 2024, just 97.41K, but it made up a balance of Ksh. 200.77B. The first quarter of 2024 saw a significant 27.06% drop from 6.66K accounts opened in the previous quarter to 4.86K accounts. Additionally, the total value of new asset finance booked receded 22.78% to Ksh. 12.84B from Ksh. 16.63B. Nevertheless, the average quarterly limit grew 5.86% from Ksh. 2.5M to Ksh. 2.64M.
Millennials (25-45 years old) accounted for a substantial portion of the principal amounts across several loan categories, including mobile loans (51.1%), personal loans (49.6%), and asset finance (16.5%). This demographic’s strong presence underscores the need for financial institutions to innovate and provide products that cater to the unique preferences and behaviours of younger borrowers.
“Kenya has a dynamic and evolving lending market, with diverse credit products and solutions available that respond with agility to consumers’ and businesses’ needs,” says Maina. “While some challenges remain, efforts towards extending financial inclusion even further, along with technological advancements, are shaping the country’s future credit market.”
The TransUnion Q1 2024 Kenya Market Analytics Report is available to download here.