If the number of credit providers in a country was a reliable heuristic for identifying a credit bubble, you would say that yes, Kenya is in a credit bubble.\u00a0 However, that is unfair since while it might be a reliable metric, by no means is it the only one.\u00a0 So the title of this blog was a bit misleading because I can’t answer it.\u00a0 This isn’t the type of blog that pours over statistics to give you the insight you need to short Kenyan bonds in the Euromarket.\u00a0 No, it’s a simple blog, one of mostly\u00a0bad casual observations.\u00a0 \u00a0But I digress.<\/p>\n
What I do know is that the Kenyan digital credit ecosystem is frothy.\u00a0 Over Easter, I talked to a friend who runs a microfinance company in Kenya, and he estimates that there are around 50 digital lenders in Kenya now.\u00a0 \u00a0The last official figure I could find was 20, and that was in 2016.<\/a>\u00a0 \u00a0Digital borrowing is by nature incredibly\u00a0easy to access.\u00a0 Customers often qualify for nothing more than giving up some privacy settings on their phone, or because they use other services on their feature phone.\u00a0 Couple this with the fact that credit businesses want to grow their loan book, and you get a dangerous combination.\u00a0 I’m not saying it’s a serious problem right now, but there are concerning signs.\u00a0 Finally, digital lenders don’t have a central database of customer information. Each lender is racing to know the most about their customers while acquiring the most customers.\u00a0 Look at the graph below.<\/p>\n
![\"\"](\"http:\/\/www.jongore.com\/blog\/wp-content\/uploads\/2018\/04\/Screen-Shot-2018-04-04-at-8.24.01-AM.png\")
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