Digital lenders have recently been experiencing delayed loan repayments and decreasing demand for new credit, a trend that they associate with the sustained street protests that have been going on for several weeks now.
According to the lenders, these ongoing demonstrations have disrupted their target customers’ economic activities, as reported by Business Daily.
The protests were once again witnessed on Tuesday this week led by young Kenyans in cities and towns across the country, forcing many businesses to shut down operations for safety purposes.
The digital lenders operating in the country link this disruption with the inability of small business owners to pay their weekly loans on time.
“We have seen a decrease in volumes (of loans being tapped) and an increase in late repayments because of the uncertainty being created. We have accepted that this is a necessary pill to swallow in the short term for a better future,” said Kevin Mutisyo, chairperson of the Digital Financial Services Association of Kenya.
“We hope for a solution that can allow for the normal resumption of business,” he added. Mr Mutiso explains that the weekly protests on Tuesdays and Thursdays have meant two days when individuals and businesses don’t earn enough income to either repay existing loans.
“The trend shows consumers are now using our loans for survival purposes, which speaks to the macro-economic situation. It demonstrates to us that they are losing that ability to generate income and as a result affecting our business through late repayments and defaults.”
