Digital lenders are experiencing delays in loan repayments and slowed appetite for new credit, blamed on the sustained street protests that have disrupted the economic activities of their target customers.

Kevin Mutiso, the chairperson of the Digital Financial Services Association of Kenya said the anti-government protests have hit at the heart of its customers including, small shop owners and vegetable vendors.

“What this means for us is that our customers, including mama mbogas and boda bodas, are unable to pay because usually they are the ones on the front line. The protests are affecting their income and their ability to repay loans,” he said in an interview.

“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. We hope for a solution that can allow for the normal resumption of business,” he added.

Many small businesses and individuals tap the micro-loans for working capital and for emergency needs such as shortfalls in fuel, rent, and other basic needs like food.

Mr Mutiso explained that Tuesday and Thursday weekly demos have meant two less income-generating days. This has therefore hurt the ability to service 7-day or 15-day loans, leading to delays of a week or two.

Protesters, mostly youth, Tuesday continued with protests, disrupting businesses and transport. This marked a continuation of the demos that started last month, forcing the government to climb down on new taxes that had been lined up in the Finance Bill, 2024.

“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,” said Mr Mutiso.

Digital loan providers have had to comply with the Central Bank of Kenya (CBK) Digital Credit Providers Regulations, 2022, which among other things, prohibits them from listing defaulters of less than Sh1,000.

CBK had by June this year licensed 58 digital credit providers, binding them to the regulations that also bar them from using obscene or profane language or making “unauthorised or unsolicited calls or messages to a customer’s contacts” in the name of recovering defaulted loans.

The regulator has since March 2022 received more than 550 applications, meaning that more than 490 applicants are still eying the clearance to take part in the digital lending space. According to CBK, these applicants are at different stages of the process and are largely waiting for the submission of required documentation.

CBK started regulating this space to remove the legal lacuna that had attracted public outcry about predatory practices, in particular the high cost, unethical debt collection methods, and abuse of personal information.