Alternative Lending: A ray of hope for Kenya’s SMEs
March 20, 2024
1st March, 2024: While a huge chunk of Kenya’s small and midsize enterprises (SMEs) have faced a prolonged roadblock with inaccessibility to capital or bank loans, the situation seems to have completely changed with the advent of alternative lending.
Considered a boon for budding entrepreneurs and businesses, the format has completely eradicated stringent lending criteria, which earlier forced SMEs to show concrete yearly revenue, regular cashflow, soaring credit scores, asset ownership and others, just to get a loan.
As a result, the market valuation for alternative lending is estimated to shoot up from $246 million in 2022 to $802.8 million by 2027. Also, global reports rightly suggest the noticeable difference between loan-approval rates, wherein for banks it hovers between 14.2% to 21.3% and for alternative lenders it stands at 27.9%.
Furthermore, to avoid financial crimes like money laundering, the Central Bank of Kenya has published regulations that make it a mandate for digital credit providers to obtain a license and disclose their sources of funds.
The bigger picture is Kenya still houses a huge number of creditworthy business owners who struggle due to lack of capital, representing a massive untapped market.
Learn more about the latest innovations impacting Kenya’s FSI at World Financial Innovation Series (WFIS) on 16 – 17 July 2024 at The Edge Convention Center Nairobi.