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FSD Kenya | Creating Value through financial inclusion

Tech-enabled lending in Africa

Presentation & panel discussion

4th Regional Credit Information Sharing ConferenceSystemization of Fintech Disruption in AfricaFostering market conduct & sustainability in digital lending

28 August 2018, Kenya School of Monetary Studies

Name Title Here

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FSD Kenya: Our goal

Growth Resilience Well-being

Sustainable improvements in the lives of lower income people

in Kenya by creating value through financial inclusion

FSD Kenya | Creating value through financial inclusion3

Digital credit has experienced explosive growth in Kenya & Tanzania

(forthcoming paper from CGAP & FSD Kenya By Dr. Edoardo Totolo & Michelle Kaffenberger)

FSD Kenya.

FSD Kenya | Creating value through financial inclusion4

When you search for “Kenya loans”…

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21%

10%8%

6%

0.1% 0.1%

35%

29%

12%

4%1.8% 1.3%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Any digitallender

M-Pawa Timiza Nivushe Branch Tala Any digitallender

M-Shwari KCB M-Pesa

EquityEazzy

Tala MCo-opCash

Tanzania Kenya

Share of mobile phone owners who have

borrowed from each lender (top 5)

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Uses of digital credit37%

36%

31%

22%

14%13%

9%8%

7%

1%

35%

15%

37%

10% 10%

5%7%

20%

17%

3%

0%

5%

10%

15%

20%

25%

30%

35%

40%

For meetingday-to-dayordinary

householdneeds

To purchaseairtime

For businesspurposes suchas investment

or payroll

For personalhousehold

goods

To pay a bill Just to try itout

For medicalneeds,

includingmedical

emergencies

To pay schoolor universityexpenses

Other For betting

Tanzania Kenya

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Mobile betting: correlation or causation?

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Borrowers reporting late repayment or

default of digital loan

56%

31%

47%

12%

0%

10%

20%

30%

40%

50%

60%

Repaid a loan late Defaulted on a loan

Tanzania Kenya

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Actions taken to repay loans

9%

4%

1%1% 0%

20%

16%

6%5%

4%

0%

5%

10%

15%

20%

25%

Reduced foodpurchases

Borrowed moneyto repay the loan

Skipped payingschool fees

Sold assets orbelongings

Forwent medicaltreatment

Tanzania Kenya

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Digital borrowers who reported each

issue

27%

16%

12%9%

19%

12%

4%

8%

0%

5%

10%

15%

20%

25%

30%

Total giving at least oneof these answers

I was charged fees Ididn't expect

The lender unexpectedlywithdrew my money

I did not fully understandthe costs or fees

Tanzania Kenya

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Digital borrowers reasons for contacting

customer care

11% 12%

20% 20%

23%

13%

4%

20%

5%7%

0%

5%

10%

15%

20%

25%

To request ahigher loan limit

A question aboutthe fee or interest

rate

A question aboutthe amount I

qualify for

To report orcomplain about an

unexpectedcharge or fee

To complain aboutmy information inthe credit bureau

Tanzania Kenya

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Total # of loan sources (digital & non)

currently used by digital borrowers

31%

44%

18%

6%

2% 0% 0% 1%

31%

36%

20%

8%

3%1% 0% 0%

0%

10%

20%

30%

40%

50%

0 1 2 3 4 5 6 7Tanzania Kenya

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Share of digital borrowers with current

loan from each source

13%

9%

5%

1%2% 2%

1%

17%

9% 9%7%

4%

2% 1%

0%

5%

10%

15%

20%

A familymember,

friend,neighbor

Savingsgroup/

VICOBA

Bank SACCO Microfinance Employer An informalmoneylender

Tanzania Kenya

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#01

Phasellus id ligula ut enimelementum bibendum eget eget

magna.

Topic #3

Meet the Panel

Dan Karuga Rose Muturi Kevin Mutiso Michael Kimani

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Questions for discussion:

1. How might we be disruptive in

customer engagement to develop customer-centric business models?

2. How can risk-based credit pricing

come out of fit for purpose credit

models built here?

3. How can logical transparency be

enhanced on everything from terms

& conditions to scoring?

4. How can digital credit be

underpinned by a culture of

integrity?

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FSD Kenya | Creating Value through financial inclusion

Contact Us

3rd Floor, 9-Riverside, Riverside Drive

P.O. Box 11353, 00100 Nairobi, Kenya|

Telephone: +254 20 513 7300

Website: www.fsdkenya.org |

Creating value through financial inclusion

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Use of digital savings among digital

borrowers

43% 43%

14%

46%

35%

18%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Currently saves digitally Had digital savings in the past Never saved digitally

Tanzania Kenya

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Self-reported reasons for saving among

digital borrowers

18%

4%

14%

21%

11%

8%

1%

0%

17%

12%

32%

20%

15%

14%

12%

11%

8%

8%

5%

4%

0% 5% 10% 15% 20% 25% 30% 35%

For business purposes, such as investment or payroll

For personal things (clothes, shoes, travel)

In order to increase the loan amount, you qualify for

For meeting day-to-day ordinary household needs (e.g. food, transportation)

In order to access a loan

For medical needs, including medical emergency

To pay a utility bill, such as electricity or water

To purchase airtime

To pay school or university fees or other school costs such as uniforms orbooks

For other emergencies such as fire, flood

Tanzania Kenya