According to a new market study, men continue to borrow more than women but also lead the default list. The study on Kenya’s credit market landscape shows that digital loans are particularly dominated by male borrowers.
This trend comes as borrowers are increasingly avoiding credit for their financial needs. Francis Gwer, Senior Policy Specialist at Financial Sector Deepening Kenya, noted that while the number of borrowers has increased, the total value of loans has decreased, with Sh2.067 trillion issued in 2019 compared to Sh1.937 trillion in 2023.
Banks account for over 90 percent of both the volume and value of digital and non-digital loans. Over the past five years, the number of unique borrowers grew from 7.5 million in 2019 to 11.4 million, with men comprising the majority. On average, 6 million male borrowers and 4.3 million female borrowers access credit annually. Male borrowers received 61.4 percent of the total loans and 71.1 percent of the total loan value during this period.
Digital loans are far more prevalent, with approximately 270 million new digital loans totaling Sh1.512 trillion issued, compared to 7.8 million non-digital loans valued at Sh8.282 trillion.
“While many of the building blocks that underpin an efficient and effective retail market are in place, available evidence points to the challenge of providing appropriate and affordable credit,” Gwer said.
He highlighted a decline in the average value of non-digital loans, which dropped from Sh8,353 in 2019 to Sh4,555 in 2023, a 45 percent decrease. Additionally, the number of new negative credit listings fell significantly from 2.2 million in 2019 to 933,551 in 2023, partly due to regulatory changes and improved borrower repayment behavior.
Women have demonstrated better repayment histories than men, with men accounting for 64 percent of negative credit listings over the five-year period.
The study, which analyzed data from Creditinfo CRB from January 2019 to December 2023, provides a comprehensive look at credit patterns, including borrower demographics, loan types, and credit providers.
One notable finding is that contrary to the common belief that negative credit listings hinder future loan approvals, 69 percent of borrowers with negative records were able to repay their loans and subsequently secure new credit. The survey revealed that most borrowers with negative records had an outstanding loan balance between Sh1,001 and Sh5,000.
Additionally, borrowers initially listed with repayment difficulties (negative records) managed to fully repay their loans within seven months to one year.
Kamau Kunyiha, Regional Manager at Creditinfo CRB, highlighted that advancements in credit reporting and real-time data sharing could further boost financial inclusion and market development.
“The Credit Information Sharing (CIS) mechanism has made significant progress since its introduction in Kenya. The shift from negative-only reporting to comprehensive full-file reporting marked a pivotal development, promoting innovation and financial inclusion,” Kunyiha said.
He added, “The data gathered during this evolution has been crucial for market growth and innovation. Future advancements, such as including all credit sectors and enabling real-time reporting, could elevate the CIS mechanism even further.”
