Kenyan lenders are re-evaluating traditional collateral and guarantor requirements in credit markets, as new insights suggest these long-standing practices may be hindering rather than helping repayment performance. This shift could significantly impact financial inclusion for Kenya's Micro, Small, and Medium Enterprises (MSMEs).

• Demulla, a financial services firm, argues that borrower behavior, not assets, is the strongest predictor of repayment.
• CEO Sir Keloti Kelvin states that traditional safeguards often delay loan access and distort credit decisions.
• The firm highlights that guarantors frequently disappear when repayment issues arise, and collateral can lead to lenders overlooking high-risk borrowers with assets while excluding disciplined clients without them.
• Demulla has moved away from collateral and guarantor requirements, advocating for deeper engagement and behavioral analysis in lending.