Absa Bank Kenya’s loan disbursements via mobile credit product Timiza grew by 21 percent to Sh25.1 billion in the financial year ended December 2024, signalling rising demand for instant and affordable short-term credit.

The 21 percent growth was faster than the pace of growth in the conventional loan book, fuelled by the many small and medium-sized enterprises (SMEs) that see the mobile-based loans as a lifeline for their working capital needs. 

Mobile-based credit products such as Timiza are increasingly resonating with the needs of many SMEs given to the simplified credit scoring and approval process. Small businesses, many who do not have collateral or formal financial statements to tap conventional loans are finding this a lifeline to fund their growth.

Through Timiza, such businesses are able to leverage on the history of transactions to start tapping loans and growing their limit as they repay. Such arrangement is proving key for small businesses whose needs are unique when compared with that of large established businesses.  

Mobile-based loan products are seeing increased uptake in the country as many small businesses also see it as a chance to access credit any time business needs arise without being limited to banking hours and lengthy paperwork. 

Products such as Timiza continue to deepen financial inclusion in the country through micro-loans that are issued to a segment of the population that would otherwise have been financially excluded. Lenders are also using such products to empower small businesses to make savings for rainy days and in the process improving their credit limits.

Absa started the Timiza product in mid-March 2018 as part of its investments in digital platforms. Currently, the platform offers mobile loans of up to Sh150,000 with a 30-day repayment period, giving SMEs a chance to tap loans as many times as possible within a single month depending on their needs and limits. The lender plans to increase the value as more customers grow their limits. 

The growing uptake of Timiza loans points to the value that SMEs are deriving from these flexible loans that have helped them overcome working capital challenges. Many of such small businesses had found it difficult to comply with the conditions that established businesses have to meet before tapping loans.

The maximum amount a user can transact in a single transaction on Timiza is Sh250,000 while the daily transaction limit is Sh500,000. The cash can be accessed via MPESA or at an Absa ATM.

Absa in January last year added an automated teller machine withdrawal option on the Timiza platform, allowing customers to access funds from any of the lender's cash-automated outlets. This adds to the convenience of Timiza.

For the longest, SMEs were less likely to be able to obtain bank loans than large firms. Instead, they were relying on internal funds, or cash from friends and family, to launch and run their enterprises, denying many unable to scale up

However, banks such as Absa were quick to reimagine and modernize its business-lending processes with the understanding that the one-size-fits-all approach when dealing with customers was disadvantageous to SMEs.

SMEs business model is such that they ride on small loans to restock and repay as they sell, making them resonate with products such as Timiza that allows them to access credit on need-basis. The element of speed and convenience minimises chances of owners of such small businesses missing out on sales because of delayed credit approval.

Products such as Timiza enable seamless, end-to-end, consistent lending experience that delivers instant decisions and immediate availability of funds. By packaging such attributes in Timiza, Absa has managed to consistently grow its SME loan book.

The mobile app-based loans rely on forward-looking data sources and modelling techniques, allowing lenders such as Absa to make data-driven lending decisions. Lenders such as Absa whose mantra is ‘Empowering Africa's tomorrow, together... one story at a time’ has rode on the micro-loans to support thousands of SMEs in its ecosystem. 

Capturing real-time credit insights from transactions and sales has enabled Absa to enhance the performance of its credit models significantly and therefore reward SMEs with affordable interest rates via Timiza as opposed to viewing them as risky.

Lenders are also diversifying from just offering loans to supporting SME borrowers to make savings and also buy insurance. For instance, Absa's Timiza app also allows customers to tap mobile insurance, which enables them to access personal accident and funeral expense cover for as little as Sh42 per month. 

Customers can also send money, pay bills or purchase airtime and also save and earn returns with a savings account. For instance, in the year ended December 2024, digital savings via Timiza grew 67 percent.