NAIROBI, Kenya- Men in Kenya continue to borrow more than women but top the default list, according to a new study on the country’s credit market.
The study, conducted by Financial Sector Deepening Kenya (FSD Kenya), sheds light on the evolving credit landscape, revealing trends in digital lending and gender differences in borrowing and repayment behaviors.
The report highlights a significant gender gap in borrowing patterns, with male borrowers taking out 61.4pc of total loans and accounting for 71.1pc of the total loan value between 2019 and 2023.
Over that period, the number of male borrowers averaged six million annually, compared to 4.3 million female borrowers. Yet, men also make up 64pc of negative credit listings, meaning they are more likely to default on loans than their female counterparts.
Despite this, men still dominate Kenya’s borrowing scene, particularly when it comes to digital loans.
With more than 270 million new digital loans worth Sh1.512 trillion issued between 2019 and 2023, male borrowers continued to take the lion’s share.
The study suggests that while men may have more access to credit, they’re also more vulnerable to the pitfalls of debt.
One of the most striking findings is the overall decline in loan values. The total value of loans dropped from Sh2.067 trillion in 2019 to Sh1.937 trillion in 2023.
Even though the number of borrowers increased from 7.5 million to 11.4 million, the average value of non-digital loans plunged by 45pc, from Sh8,353 in 2019 to just Sh4,555 in 2023.
Banks remain dominant, issuing over 90pc of the loans, both digital and non-digital. However, the sharp drop in non-digital loan values points to a shift in borrowing preferences, as consumers increasingly turn to digital loans for quick, smaller amounts.
Digital loans are far more frequent, though significantly smaller in value, with the number of non-digital loans issued during the same period standing at just 7.8 million, yet valued at a whopping Sh8.282 trillion.
Francis Gwer, FSD Kenya’s senior policy specialist, pointed out that while the credit market has matured, access to affordable and appropriate credit remains a challenge for many Kenyans.
Interestingly, despite borrowing less, women demonstrate a stronger repayment history than men.
The number of new negative credit listings dropped from 2.2 million in 2019 to 933,551 in 2023, thanks to regulatory changes and improved borrower behavior. Still, men make up a higher percentage of defaulters.
The study also found that the majority of those with negative credit listings owe relatively small amounts, with outstanding balances between Sh1,001 and Sh5,000.
However, in a surprising twist, 69pc of those borrowers with negative records managed to repay their loans and secure new credit, challenging the myth that a bad credit record is a permanent barrier to future loans.
Looking ahead, Creditinfo CRB’s regional manager Kamau Kunyiha believes that advancements in comprehensive credit reporting and real-time data sharing could further enhance financial inclusion.
“Incorporating all credit sectors and enabling real-time reporting could elevate Kenya’s credit information sharing system to new heights,” he said, citing the evolution of Kenya’s Credit Information Sharing (CIS) mechanism as a crucial tool for market growth.
