Jijenga predicts high demand for loans on low household savings

 

Microlending firm Jijenge Credit limited is predicting sustained consumer demand for small loans in the last quarter of the year with more Kenyans still out of work and their ability to borrow is also limited.

“From a small one-third seeking moratorium when the CBK gave the directive in April, we now see almost two-thirds seeking it.

It clearly shows depletion of household savings in the last six months despite the reopening of the economy,” says Peter Macharia, Jijenge’s Chief executive.

The number of borrowers seeking moratorium according to Macharia is growing day by day.

Most of these borrowers now want to hold back whatever liquidity they have with no or less cash flow and the bottom of the pyramid borrowers are also in search of fresh doses of loans to resume their businesses.

Stress in the financial sector has soared since the coronavirus pandemic hit in March with about 70 per cent of borrowers seeking a moratorium on loan repayments as their incomes dipped and savings were eroded.  

The jump in the uptake of the loans emerged in a period when the economy shed more than two million jobs on the back of sluggish corporate earnings in the wake of Covid-19 economic hardships.

The Central Bank in March – just after first restriction measures were out in place, directed SMEs to contact their banks for assessment and restructuring of loans based on their circumstances – in a swift move that saw all lenders activate such plans, initially on three-month moratorium agreements to their customers – but the repayment holidays for most borrowers were extended to September.

Last month Jijenge Credit limited penned an agreement with the Public Service and Gender ministry to extend commercial loans to government-backed employees with existing payslips.

It said that the rollout of a digital interface of a check-off system will see it reach out to civil servants drawn from various ministries and Parastatals for loan offers against their payslips.

“We already have the approval from the Ministry. Civil servants can now borrow through us and that one will be done digitally with no paperwork,” said Peter Macharia

The firm is targeting to loan out up to Sh200 million to government employees in the first six months of the system’s take off.