Digital credit provider Tala has halted operations in Tanzania after failing to gain traction in the market, in a move that turns focus on its business in Kenya.
But in a statement to media houses on Tuesday, the management said Tala Tanzania “has not made a decision to permanently close operation but was reviewing its operations”.
“After piloting our credit product in Tanzania,” the statement said, “we have paused our lending operations and are undertaking a review of our operations to determine our path forward in the market.”
It’s not clear why Tala, one of the leading digital lenders in Kenya, suddenly halted credit issuance in Tanzania. Analysts are likely to point to either a hostile business environment or high default rates in the market, with the company urging Tanzanian customers with outstanding balances to make repayments.
Tala faces an uphill task recovering money lent out to Tanzanians since the credit is unsecured. It said its operations in Kenya will continue uninterrupted as the country is a critical part of its global business.
Digital lenders in Kenya, who include mobile operating company Safaricom through M-Shwari and KCB M-PESA, are grappling with high default rates as many borrowers struggle to pay back. Many often end up changing mobile numbers used to borrow and seek more credit elsewhere but suffer the consequence of being listed by credit reference bureaus as defaulters.
Tala has attracted over 27 million customers globally and has operations in Kenya, India, Mexico, and the Philippines. The list of digital lenders in Kenya has been growing.
Digital Loans Uptake
Tala has revolutionized financial services for unbanked consumers. Its first product was a lending app that instantly underwrites and delivers credit to customers who don’t have a formal borrowing history. More than 3 million customers across East Africa, the Philippines, Mexico, and India use Tala loans to start and expand small businesses, pay school fees and bills, and build more stable financial lives.
Tala operations are backed by leading venture and impact investors including PayPal, Revolution Growth, IVP, and Lowercase Capital. Tala is headquartered in Santa Monica with additional offices in Nairobi, Manila, Dar Es Salaam, Mexico City, and Bangalore.
We are actively working to continue to support financial access in TanzaniaTala Management
The digital finance app provider in August this year announced a $110 million (Ksh11 billion) series D funding to accelerate financial inclusion around the world.
The new round of investment will support the launch of new products in the Tala loans ecosystem that promotes financial health and creates value for its customer base.
Tala (formerly Mkopo Rahisi) was launched in Kenya in 2014, becoming the first in the world to offer unsecured mobile lending directly to consumers. Since then, Tala has expanded credit access across Kenya by using alternative data to instantly underwrite and disburse credit to people who have been excluded from traditional finance due to a lack of credit history or formal records.
Tala Statement On Temporary Stoppage to Loan Issuancein Tanzania
Nairobi Kenya, 17 September 2019…Tala Tanzania has not made a decision to permanently close operations. However, after piloting our credit product in Tanzania, we have paused our lending operations and are undertaking a review of our operations to determine our path forward in the market.
Tala remains a mission-driven global company that has impacted over 4 million individuals with over $1 billion in disbursed loans. We are actively working to continue to support financial access in Tanzania.
Our operations in Kenya continue uninterrupted as Kenya is a critical part of our global business. We are continuing to evolve our product to meet the needs of our 3 million customers here and are also piloting some exciting new offerings in financial e*******n and coaching.