At least 12 per cent of borrowers failed to pay their debts, according to the Credit Reference Bureau (CRB).
Majority of the defaulters are young people who do not have gainful employment and rely on online mobile lending platforms to meet their daily financial needs.
According to the Metropol Corporation Managing Director Sammy Omukoko, young people are abusing the system.
“They take money and throw away their sim cards, get another one, borrow and again destroy the sim cards. Some take the loans but they have no money to repay the loan while others take the loan but before repaying, they lose their jobs,” said Mr Omukoko yesterday.
He added: “We have 19 million Kenyans listed in the CRB, out of which 17 million are eligible borrowers but over 2 million of them are defaulters and therefore cannot access loans from any financial institution,”
The financial expert said a majority of Kenyans survive on mobile money borrowing, saying those who have a good rating with CRB will continue enjoying the lending services.
“There is a lot of online borrowing between 2am and 5am with a majority being Nairobi residents. Upon investigations, we realised that they were small-scale traders at Gikomba market and slum dwellers,” said Omukoko.
Last week, Safaricom announced that over a million Kenyans took Fuliza loans, in the past 12 months, pushing disbursements to Sh502.6 billion from Sh351.2billlion in the previous year, representing a 43.1 per cent growth of loans taken between April 1, 2021 and March 31, 2022.
The telco made a profit of Sh5.6 billion after borrowers on the Fuliza loan service grew to 6.9 borrowers from 5.9 borrowers in 2021.
“Majority of Kenyans borrow for consumption and in the long run they become heavily indebted since the mobile loans are very expensive,” said Byrone Omondi, an economist.