Kenyans turn to advance loans as salary delays bite

Over half of salaried Kenyans rely on advance loans amid delayed wages, says UNIFI. [File Courtesy]

Over 50 per cent of salaried personnel in public and private jobs depend on advance loans to survive in the current harsh economic times due to delayed wages from their employers. 

A report by UNIFI, a digital lending company offering advance loans to employees in Kenya, over 25,000 of its customers survive on advance loans to make it through the month. 

UNIFI Communication Officer Gloria Kamotho said that most of the clients who take advances are faced with financial constraints that require a top-up. 

Speaking during the opening of UNIFI’s new office in Mombasa, Kamotho said the delay of salaries and shrinking payslips have placed many households under financial constraints to meet all their competing needs against the ever-expanding Cost of Living. 

“We have been in the Kenyans market since 2022 and we have served 25,000 clients in Kenya with one million clients across Africa. We have seen a significant uptake in the market for digital loans.

This has been attributed to the current harsh economic times affecting households and delayed salary remittance from both the public and private sectors,” said Kamotho. 

Kamotho said that the advance loan is meant to make life easy for that parent who, in between the months, wants to complete their child’s fees and sort out that medical bill for their loved one. 

She said there has been a gap in responsible lending without the predatory nature of the debt cycle. 

“Being able to serve our clients through in-app and physical branches, we have built that client trust and transparency in a market where we have over 200 digital lenders that are regulated by the Central Bank of Kenya (CBK). There has been a need to give our clients fast, unsecured loans without predatory terms,” said Kamotho. 

UNIFI country manager Gys Steyn said most employees want a place where they can build trust and have a minimum requirement when seeking an advance loan. 

Steyn said the UNIFI is already operating 10 branches in Kenya, an indication of growing demand for a trusted partner that understands their needs and does not take advantage of the financial strains to impose unreasonable terms. 

“With this new office in Mombasa being the 10th branch in Kenya, we have seen a growth of confidence and growth of the number of employees taking up advance loans because of the dynamics of how we operate,” said Steyn. 

He said that with over 70 branches in Africa, they still believe in the old walk-in model, where customers are able to consult and be advised appropriately while having a physical address where they can complain. 

The Manager said that a customer only requires a payslip, bank statement and Identity Card to apply for a loan and one has the alternative of using a USSD card to borrow and pay for a loan after visiting the branches for the first time. 

 “We are completely unsecured; we do not do checkoffs, we take no collateral, we do not take asset financing, but we draw the line that you need to be formally employed,” said Steyn. 

Mombasa County Minister for Trade Mohammed Osman admitted that the current economic times have pushed households to the brink of survival and that a salary advance is an alternative to solve pressing family needs. 

“Those who feel that within a month die to delayed salaries and given the harsh economic times when most companies are faced with crisis, they can take advance salary loans to sort themselves out from trusted lenders with reasonable terms,” said Osman. 

He said that the digitisation of all licences as a one-stop centre in Mombasa has made it easier for investors to choose Mombasa as an investment hub.