The loan institutions will be guided by the special circumstances and ethical principles of responsible lending. Majority of Kenyans access digital credit for business purposes such as investing and paying salaries, and to meet everyday household needs
The Digital Lenders Association of Kenya (DLAK) is advising their members to update their scoring models and the method of calculating creditworthiness to include the economic and social impact of COVID-19 pandemic.
Developing countries have seized on mobile technology to fill gaps in financing and achieve financial deepening. Fintech companies make the process easier by implementing swift and reliable ways to disburse loans instantly aided by extensive algorithms that easily scan the financial status for borrowers.
Mobile lenders have been urged to increase credit access to the informal sector with experts saying such a move by existing providers would go a long way in supporting underserved livelihoods like the Juakali sector.
Initially, the mobile lenders existed independently, and regulation was a challenge. But as mobile lending becomes established, we are seeing a more robust drive for self-regulation through the Digital Lenders Association of Kenya (DLAK) that was formed last year. This has brought stability and certainty in the industry.
The entrepreneurship journey is extremely lonely, and many people sacrifice a lot, including friendship and even marriage to come on top of things. Most time is spent looking for capital. The simplest way to weed out those lenders who avoid meeting the required standards is to verify the list of lenders associated on DLAK’s website (the Digital Lenders Association in Kenya), as its members comply with the agreed Code of Conduct.
In most entrepreneurship forums, majority of motivational speakers invariably overlook or underplay the role of capital in starting a business. The common rider always is, “get a business plan, a strategy and everything else will fall into place.”