Young people between the ages of 18 to 25 considered as ‘Generation Z’ are the majority of mobile loan borrowers, according to TransUnion, Rwanda’s credit reference bureau.

Overall, there are at least 1.5 million credit active individuals and companies–people who have loans in different financial institutions –in the country.

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Gen Z, which is arguably new to credit in the market, has started to pick up with a customer base of 134,842 people and a balance of Rwf182 billion, according to figures from TransUnion.

It indicates that 49 percent of loans for this category is in mobile loans, while 26 percent is in personal loans from banks.

This is while Millennials, people aged between 26 and 41, are the majority when it comes to overall loan uptake, 590,171 customers with a total of Rwf2.3 trillion credit balance by end of 2022.

However, it does not mean they are the ones with outstanding loans.

The uptake is a result of post-Covid spending and investment activities since these people make up most of the working class.

In 2022, NCBA Rwanda, a bank offering Mokash service in partnership with MTN Mobile Money disbursed about 200,000 loans amounting to Rwf3.5 billion to young people aged 18 to 25 with an average loan amount of Rwf20,000.

MoKash provides 30-day term loans at 9 percent interest.

Roselyn Munyana, Head of Digital Business at NCBA Rwanda, said that the loan uptake and average value has grown by about 60 percent when you compare 2022 with the previous two years.

"Mokash has made it easy for young people to access credit because of the good rate at which they can afford such micro loans and the channel of distribution is quick and easy with less requirements compared to conventional loans,” she added.

Rosine Dusabe, a 23-year-old resident of Kicukiro District, said that she uses Mokash loans when there is an issue she needs to respond to with urgency.

"Waiting for someone to help you in such cases might not seem as a good idea, considering that you may sometimes even not find them, or when push and pull bank services are down. So these loans come in handy quickly,” she explained.

This is a common reason among Mokash borrowers. However, from a mini survey conducted by The New Times, the same age group tend to delay paying back the loan and this calls for being blacklisted from eligibility for credit in any financial institution, according to TransUnion.

By the end of 2022, the level of Non-Performing Loans (NPLs) in the market was 8.1 percent. NPLs are loans that exceed the 90 days repayment period.

According to Samuel Tayengwa, Country Director of TransUnion, NPL status is not ‘bad at all’ given that the country was coming out Covid-19 pandemic and a lot of loans had to be restructured, companies were not in operation, and people lost their jobs.

He noted that banks need to look at a way of giving credit in the most efficient and effective way. "It’s not like people don’t want better limits but they are prone to go the easiest way,” he added.

Munyana also reiterated that banks can consider alternative forms of credit assessment, such as behavioral data, to assess the credit worthiness of youth borrowers who may not have a traditional credit history.

She also urged financial education and awareness programs to help youth better understand the loan application process and the responsibilities involved in taking out a loan.

Maximum limit for mobile money lending is Rwf500,000.

Through the Menyesha platform, credit consumers and financial institutions can view credit records and whose loans are not performing.