Springboard Capital predicts a spike in loan demand

By Steve Umidha

Consumer demand for credit is likely to soar in the coming months despite the August election jitters, according to financial expectations by Springboard Capital, whose predictions show that many SMEs will likely continue to borrow but their ability to do so will be limited.

Stress in the financial sector has soared since the coronavirus pandemic hit in March of 2020 with about 70 percent of borrowers seeking 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 last year on the back of sluggish corporate earnings in the wake of Covid-19 economic hardships brought by lockdown restrictions and closure of several workplaces.

But that could change this year, if projections by the financial lender are anything to go by, even as the firm plans to advance up to 60 percent of its loan-book to struggling Kenyan SMEs unsettled by the Coronavirus pandemic.

“It is a trend you are likely to see change this year and beyond and from our projections, the August polls will not hinder the momentum. We have seen enough to convince us that it will be a good year,” said Springboard Chief executive Carolyne Gathuru.

Speaking last week during the firm’s unveiling of its new town office, Springboard’s Gathuru said the lender will aim to loan more to the SMEs this year than it has given out in the last two years owing to the growing loan demand.

“We have an aggressive growth plan and we will grow 60 percent more than we have done in the last two years,” said Ms Gathuru, adding that the loan appetite is being driven by the desire from businesses to return to full operations following the disruptions caused by the pandemic.

With most Kenyans still out of work and several others operating on pay-cuts and reduced earnings, demand for loans and especially small loans is expected to spike with local banks and other micro financial institutions, according to Gathuru, will continue to offer extended capital relief to struggling businesses and individuals who are still reeling from the pandemic hangovers.