Lending in Africa: The Good, the Bad and the Ugly

Consumer lending and credit have existed in informal economies long before modern credit scoring and the traditional banking models we know now. The north star of financial inclusion has seen a number of Fintech providers enter the space when the financial inclusion fuelled frenzy descended upon the lending market throughout the 2010s.

Financial service providers who have managed to nail lending in Africa have tailored offerings to their markets that adopt a de-colonised approach, which disregards the sequence of product evolution we’ve seen in the global north.

Nevertheless, the speed and ease of access to credit through mobile applications has caused many borrowers to become heavily indebted. In Kenya, 20% of borrowers struggle to repay their loan. This is double the rate of loans from traditional banking. This is the bad and ugly side of truly digital lending and business models.