Cheap Mobile Loans in Kenya: The most costly and cheapest mobile loans in Kenya have now been revealed. This revelation has been done by a Kenya Bankers Association (KBA) report titled Digital Credit, Financial Literacy and Household Indebtedness, which was intended to analyze the uptake of loans on mobile phones and their impact on borrowers.
Okoa Stima, the product which allows distressed electricity consumers to buy units on their pre-paid or post-paid connections on credit, is the most costly mobile loan in Kenya. It charges 43.4 per cent monthly interest. It is offered by Safaricom on its M-Pesa platform.
Kopa chapaa, which is operated by Faulu Kenya and Pesa na Pesa, a product owned by Nairobi-based AVLC Group, complete the top three most expensive loan products.
Kopa Chapaa’s monthly interest rate is set at 38.8 per cent. Pesa na Pesa by AVLC Group is third. The fourth most expensive product – Pesa Pata – has an interest rate of 30.4 per cent.
Mainstream lenders including Kenya Commercial Bank Group and Commercial Bank of Africa (CBA) through their platforms KCB M-Pesa and M-Shwari respectively, price their loans at a rate of 7.5 per cent a month.
Under Okoa Stima facility, electricity consumers get credit of between Sh100 and Sh2,000 to settle power bills, which is repaid at an upfront flat charge of 10 percent of the borrowed amount. Defaulters are charged a penalty of 10 percent on the advance. The loan should be repaid within a week.
“The high fees and the interest rate on digital credit can reduce household income over time, particularly if borrowers are taking loans for non-productive purposes and thus the returns on investments financed by digital loans may be insufficient to cover loan obligations when they fall due,” the study reads.
The list of expensive and cheap mobile loans in Kenya is as follows:
1). Okoa Stima – 43.4 per cent
2). Kopa Chapaa (Faulu) – 38.8 per cent.
3). Pesa na pesa (AVLC Group).
4). Pesa Pata – 30.4 per cent.
5). Kopa Cash – 15.3 percent.
6). Tala – 12.7 per cent (equates to 153 percent over a year).
7). Branch – 7.6 per cent.
6). M-Shwari – 7.5 per cent fee.