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JANET NJERI KARIUKI 19/03484 FACTORS AFFECTING MOBILE LOAN REPAYMENT AMONG YOUTHS IN KENYA: A CASE STUDY OF LANGATA SUB COUNTY CHAPTER ONE INTRODUCTION 1.1 Background of the Study Kenya’s financial landscape has changed significantly in recent years with the emergence of mobile lending platforms, which has altered traditional perceptions of credit accessibility. One of the beneficiaries of this financial revolution is the youth, who have become active participants in the mobile lending ecosystem and are attracted by fast and convenient lending solutions. However, as young people in Kenya actively engage in mobile lending, a key challenge has emerged: the complex interplay of factors that influence their ability to repay loans. This study addresses this complex situation by focusing on the factors that influence mobile loan repayment among adolescents in the dynamic environment of Langata County. Langata, as a microcosm of Kenyan cities, contains a variety of socioeconomic variables that have a unique impact on young people’s financial behavior and repayment capabilities. Factors Similar as employment misgivings, fiscal knowledge gaps, and socio-artistic influences weave a complex narrative that demands a comprehensive disquisition. The study seeks to unravel these complications, contributing not only to the academic converse on fiscal addition but also offering practicable perceptivity for fiscal institutions, policymakers, and the youths themselves, eventually aiming to foster sustainable and responsible mobile lending practices within the vibrant environment of Langata Sub County. 1.1.2 Mobile loan Lending Firms In Kenya, the geography of fiscal services has experienced a transformative shift with the emergence and proliferation of mobile loan lending enterprises. These enterprises have exercised the power of mobile technology to give quick and accessible credit results to a different range of consumers, particularly those preliminarily underserved by traditional banking systems. Notable exemplifications include Safaricom's M- Pesa, which innovated the

integration of mobile plutocrat and credit services, and other independent lending platforms similar as Tala, Branch, and KCB M- Pesa. The success of these enterprises can be attributed to the wide relinquishment of mobile phones in Kenya, indeed among parts of the population with limited access to traditional banking. This has eased a paradigm shift in fiscal addition, allowing individualities to pierce credit, frequently within twinkles, through their mobile bias. still, the rapid-fire growth of mobile lending has raised enterprises about consumer protection, interest rates, and responsible lending practices, egging nonsupervisory scrutiny and calls for a balanced approach to insure the sustainability and ethical conduct of these enterprises in the Kenyan fiscal geography( Jack, 2017; Mas, 2016; Suri & Jack, 2016). As these mobile loan lending enterprises continue to shape the fiscal gests of Kenyan consumers, understanding their impact, challenges, and counteraccusations for the broader frugality becomes pivotal for policymakers, controllers, and experimenters likewise. 1.1.3 Fiscal factors In the dynamic geography of mobile loan lending enterprises in Kenya, colorful fiscal factors play a vital part in shaping the operations and impact of these realities. One of the crucial motorists is the wide relinquishment of mobile plutocrat services, particularly M- Pesa, which has handed a robust structure for the facilitation of mobile loans (Jack, 2017). Also, the use of indispensable credit scoring styles, frequently using mobile data and sale histories, has allowed these enterprises to assess the creditworthiness of individualities that might be barred from traditional banking systems (Mamas, 2016). Still, the fiscal success of mobile lending enterprises is intricately tied to interest rate structures, and the associated pitfalls of high- interest loans have urged conversations on consumer protection and the need for responsible lending practices (Suri & Jack, 2016). Also, the nonsupervisory terrain plays a pivotal part in governing the fiscal operations of these enterprises, icing a delicate balance between fostering fiscal eliminations and guarding consumers. As these fiscal factors continue to evolve, their impact on the sustainability and ethical conduct of mobile loan lending enterprises in Kenya remains a subject of ongoing exploration and nonsupervisory attention. 1.1.4 Regulatory conditions In the realm of mobile loan lending enterprises in Kenya, nonsupervisory factors and interest

rates are critical determinants that significantly impact the assiduity's dynamics. The nonsupervisory terrain plays a pivotal part in shaping the conduct of these enterprises, icing fair practices and securing consumer interests. The Central Bank of Kenya (CBK) has been laboriously involved in formulating regulations to govern mobile lending, aiming to strike a balance between fostering fiscal eliminations and guarding consumers from raptorial lending practices (CGAP, 2019). Interest rates charged by mobile loan lending enterprises have been a subject of scrutiny, with enterprises about the affordability and translucency of these rates. The Kenyan government, through the CBK, has enforced interest rate caps to cover borrowers from extravagant charges, emphasizing the need for responsible lending (CGAP, 2019; Waweru, 2019). Still, these regulations have also sparked debates about their implicit impact on the sustainability of mobile lending operations and the assiduity's capability to feed to high- threat borrowers. As nonsupervisory fabrics continue to evolve, striking the right balance between promoting fiscal addition and icing responsible lending practices remains a complex challenge in the Kenyan mobile loan request. 1.1.5 Mobile Loan dereliction and Factors affecting mobile loan defaults Mobile loan defaults have surfaced as a significant challenge within the mobile lending geography in Kenya, impacting the sustainability of lending enterprises and raising enterprises about fiscal addition and consumer protection. Several factors contribute to this miracle in the environment of mobile loan lending enterprises. The rapid-fire growth of mobile lending and the ease of access to credit without robust credit assessments have led to a advanced threat of defaults (Mamas, 2016). Unstable income aqueducts, current among the youth demographic frequently targeted by mobile lenders, contribute to prepayment challenges (Mbiti & Weil, 2011). Also, the lack of comprehensive fiscal education may affect in borrowers taking loans without a clear understanding of the terms and scores, leading to unintentional defaults (Mutuku, 2019). High- interest rates, a common specific of mobile loans, can also strain borrowers' fiscal capacities, contributing to defaults ( Suri & Jack, 2016). The complex interplay of these factors requires a nuanced understanding to develop effective threat mitigation strategies, promoting responsible lending practices while icing that fiscal services remain accessible to all parts of the population. 1.2 Problem Statement

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The proliferation of mobile financial companies in Kenya is undoubtedly changing the financial landscape, giving consumers unprecedented access to credit. However, this rapid expansion also comes with many challenges that must be carefully considered. One of the main problems is that the risk of default on mobile loans increases as borrowers faces financial stress, which is further exacerbated by high interest rates (Suri & Jack, 2016). Additionally, concerns have been raised about interest rate transparency and overall affordability of mobile loans, which could expose borrowers to predatory lending practices (CGAP, 2019). As the non-supervisory terrain continues to evolve, we face the delicate challenge of chancing a balance between promoting fiscal eliminations and guarding consumers from implicit exploitation (CGAP, 2019). A borrower's lack of comprehensive financial education may lead to unexpected defaults, as the individual may not fully understand the terms and obligations of the loan (Mutuku, 2019). These multifaceted challenges highlight the need for a comprehensive investigation into the operational and regulatory aspects of mobile lending companies in Kenya to ensure the sustainability of the industry while promoting responsible lending practices and protecting the interests of consumers 1.3 Study Objectives 1.3.1 General Objective To establish the factors affecting mobile loan repayment among youths in Kenya a case study of Langata Sub County 1.3.2 Specific Objectives 1. To find out the loan factors influencing mobile loan repayment among youths in Kenya 2. To establish the business factors that influences mobile loan repayment among youths in Kenya 3. To determine the group dynamics influencing mobile loan repayment among youths in Kenya

1.4 Research Questions 1. Do the loan factors influence the repayment mobile loan among youths in Kenya? 2. Does the business factor influence mobile loan repayment among youths in Kenya? 3. Do group dynamics influence mobile loan repayment among youths in Kenya? 1.5 Significance of the study This research is of triple importance to economic, social and political decision-makers. From a business perspective, it will provide an understanding of lending practices, identify key challenges facing the industry and propose solutions to improve repayment rates. At a societal level, it helps understand the financial management skills of young people while identifying areas for improvement in financial literacy programs. The findings will be incorporated into the decision-making processes of policymakers and financial institutions, allowing them to refine mobile lending policies and help improve access to credit for Kenyan youth. Ultimately, this research aims to advocate for improved financial stability for young borrowers and the mobile lending industry in Kenya 1.6 Justification of the study This study aims to fill this gap by providing an in-depth study of the factors influencing youth mobile loan repayments in Langata County. The findings not only contribute to academic discussions but also provide practical insights to financial institutions and policymakers aiming to improve the efficiency of mobile lending among young people. 1.6 Scope of the Study The study will focus on demographic variables including, but not limited to, age, gender, education, and employment status. In addition, economic factors such as income level, financial literacy and access to alternative sources of credit are also taken into account. The study will also focus on behavioral aspects such as mobile usage patterns and the impact of peer influence on loan repayments. By limiting the study area to Langata County, the findings will provide insights specific to the region.

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