Oral East AfricaWith the confusion over the school calendars, tough economy and increasing emergencies Kenyans can find solace in the smiling branding of back to school advertisement.
This world where parents hug happy kids and kiss chubby cheeks, fathers teaching how to tie school shoes and even creating family time to read, could offer cozy comfort.
Bank branding while offering the relief of loans may be giving the country something a bit more, a cheer on national angst and frustrations.
Cost of education vs loan ticket size
Fintech credit provider Tala recently posted self-reported data from loan applications it has been tracking since 2019 in Kenya, Mexico, and the Philippines, which shows loans taken for education increase by nearly 50 percent during back-to-school months.
Tala reported that the average ticket sizes in Kenya stood at around Kes19,560 which reveals fundamental limits in short term school financing. Short term mobile loans are just not the best way to fund education.
The quantum is too low meaning the average Kenyan family size with three children the mobile lenders will need you to pawn yourselves to different players attracting very high interest rates and stumbling into a vicious debt cycle.
Absa BNPL
But Banks have noticed there is a gap in this market just as they is in nearly all consumer markets in Kenya, low penetration of credit card products known better as Buy-Now-Pay-Later BNPL platforms.
Absa Bank Kenya scaled up its card features by introducing the Buy Now Lipa Pole Pole solution that will allow its credit card customers to manage their expenses.
Absa Banks is especially attuned to school fees loans given its low interest rate of 2.67 percent and a quantum of up to Kes150,000, allows parents to spread the cost of back-to-school purchases and school fee payments in a structured payback plan over a period of up to 12 months.
The Lender claims that with its BNPL product it not only promises feel good marketing, it can actually deliver peace of mind to parents knowing that they can provide for their children, giving them the best possible education without compromising their financial stability.
“The flexibility and convenience offered by BNPL allow parents to focus on what truly matters—your child’s academic story,” Absa Bank says.
Vultures circling
Overdraft or credit card like services including Fuliza have become popular with consumers especially under the current financial strain where inflation is rising and incomes have stagnated.
MasterCard has teamed up with a BNPL company Lipa Later to unveil a short-term financing product that targets largely merchants while Craft Silicon, a technology firm that also owns ride-sharing company Little, launched its own version of BNPL they described as Get Now Pay Later (GNPL).
Safaricom unveiled its zero-interest credit service for the purchase of goods for up to Sh100,000enabling its more than 32 million customers to buy on credit from businesses on the telco’s Lipa Na M-pesa platform.
It is however attracting Kenya’s political leadership who see this as a grey are open for exploitation and ripe for regulation.
The National Assembly committee on Finance and National Planning will investigate credit facilities advanced by telco operators and buy-now-pay-later platforms which they claim are creating sad tales of exorbitant rates and crafty rules that have seen people’s properties repossessed.
The National Assembly Committee on Finance and National Planning committee chairman Kuria Kimani, pointed out that the regulatlons CBK is using to govern the sector are· those of Digital Credit Providers and do not actively cover the BNPL firms.
