A new nationally representative phone survey conducted by CGAP in Tanzania examines whether the digital credit phenomenon is living up to this hype. They interviewed more than 4,500 Tanzanians, including 1,132 digital credit users, to understand who is using digital credit, how it fits into borrowers’ portfolios, and what risks are emerging. Their findings suggest that while borrowers are using digital credit to meet everyday needs, few turn to it for emergencies. They also find that nearly a third of digital borrowers have defaulted on a digital loan, and more than half have repaid a loan late.

While digital credit may be providing benefits for many borrowers, perhaps smoothing consumption when it is used for household needs, it doesn’t seem to be living up to the hype of helping households cope with medical expenses, emergencies or paying school fees when income is tight.