KENYA: Mshwari and Fuliza lead as SMEs top loan providers

KCB and NCBA backed Mshwari and Fuliza have been established as the most accessed mobile credit providers by Kenya’s small and medium enterprises (SMEs)  in 2020.

According to a survey by SME consultancy Viffa Consult, the two have eaten into the digital lenders share of the SME borrowers market replacing Tala and Branch who led in 2019.

Other leading mobile credit providers in the survey include KCB Mpesa, Okolea, Equity’s Eazzy Banking App and Absa’s Timiza.

“Financial institutions backed mobile credit providers have overtaken the unregulated digital lenders from greater marketing and a higher working capital provision. The providers further have better payment terms in comparison,” noted Viffa Consult Managing Director Victor Agolla.

Inventory purchases, utility payments, marketing and the settlement of wages and salaries rank as the top uses for credit accessed via mobile channels.

Utilization has however gravitated towards cash-flow and working capital management as long-term financing through traditional bank loans falls out of range for most SMEs.

The survey has revealed SMEs largely access credit via the mobile platforms on a monthly basis at 79 per cent with the average loan size ranging between Ksh.5000 and Ksh.10,000.

SMEs have marked service convenience, favourable credit terms and fast credit processing time as factors encouraging the adoption of mobile credit.

“SMEs continue to deploy mobile credit application due to better terms of credit. Mainstream bank loans would for instance require businesses to have collateral,” added Mr. Agolla.

Credit Referencing Bureau (CRB) listings, short repayment periods, insufficient credit limits, high interest rates and consumer protection concerns have however been sighted as factors discouraging mobile credit use.

The survey was carried out between August 24 and 26 and featured 158 SMEs across the counties of Nairobi, Kisumu, Homa Bay, Kajiado, Machakos, Nakuru and Mombasa.