This comes as Uhuru’s government aims at increasing the supply of credit under a scheme whereby the government will also pay part of the loans which have been defaulted.
This new strategy is expected to benefit those who take loans through the mobile phone lenders as well as Sacco loans.This process has been initiated through a government scheme called State-backed Credit Guarantee Scheme.
Recently, only a very small number of medium-sized businesses has been getting loans from digital lenders and from Saccos since many Kenyans have defaulted loans. Some of the digital lenders had also begun losing trust with their customers due to the large number of defaulters.
However, the State-backed loans are expected to increase the number of people accessing the loans. Uhuru’s government is now looking forward to pilot the State-backed Credit Guarantee Scheme as appetite for mobile loans rises. This will boost credit worthiness for the small scale traders and therefore leading to growth of SMEs. The scheme is also expected to increase small businesses in the country.
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