Kenyans borrow a staggering $3.85 million (Ksh 500 million) daily through digital lending platforms. This is according to a new report released by the Digital Financial Services Association of Kenya (DFSAK). Per the report, the daily numbers would amount to a monthly total of $115.38 million (Ksh 15 billion).
The findings, unveiled on Wednesday, underscore the growing reliance on digital lending in Kenya and its crucial role in driving financial inclusion across the East African nation.
The report indicates that over 8 million Kenyans, about 16% of the country’s population, are active borrowers each month, tapping into the convenience and accessibility offered by digital lenders. This surge in borrowing highlights the transformative impact of the digital lending industry, which has become a lifeline for millions, particularly in underserved sectors such as the boda boda (motorcycle taxi) industry.
DFSAK Chairman Kevin Mutiso noted that nearly all boda boda riders have relied on non-deposit-taking credit providers to finance their motorcycles, a trend that has fueled entrepreneurship and mobility nationwide.
“The digital lending industry has become crucial for growth, attracting foreign investment, creating jobs, taking risks, and lifting millions out of poverty,” Mutiso said in a statement accompanying the report. “We remain committed to empowering and protecting this vital sector for the benefit of all Kenyans.”
The association’s data also reveals that digital lenders are not only providing quick access to funds but are also playing a significant role in boosting Kenya’s digital economy by financing an average of 100,000 smartphones monthly. This has significantly expanded internet access and digital participation, particularly among low-income households and small business owners.
The report comes at a time when Kenya’s digital lending sector is undergoing a regulatory transformation. DFSAK welcomed the Business Laws (Amendment) Act 2024, which took effect in January, bringing digital credit providers under the oversight of the Central Bank of Kenya (CBK).
This legislation has introduced much-needed clarity to the industry while enhancing consumer protection measures. Previously plagued by issues such as predatory lending practices and unethical debt collection, the sector has seen a dramatic reduction in consumer complaints, from 4,000 per month to just a handful, thanks to the adoption of a stricter code of conduct by DFSAK members.
The association is also collaborating with the Office of the Data Protection Commissioner to establish additional safeguards, ensuring that borrowers’ personal information is handled responsibly.
Kenya leads digital lending evolution
Looking ahead, DFSAK is shifting its focus to advocate for tax reforms, particularly around bad debt allowances, to bolster the sustainability of the digital lending industry. Mutiso emphasised that such reforms would enable lenders to manage risks more effectively, ensuring the sector’s long-term viability.
The association also announced the expansion of its board, welcoming 4-G Capital and M-Kopa, bringing its total membership to seven. Other board representatives include Aspira, Kuwazo, Oye Platform Solutions, Tala, and Zenka—key players in Kenya’s digital lending ecosystem.
Kenya remains a trailblazer in Africa’s digital lending revolution, a position pillared by its high mobile penetration rate and an increasing demand for accessible financial solutions. With mobile phone usage widespread even in rural areas, digital platforms have bridged the gap left by traditional banking institutions, offering instant loans to millions who were previously excluded from formal credit markets.
The report highlights that over 70% of digital loan borrowers use the funds for business purposes, such as working capital for small enterprises, while others rely on them to meet daily household needs amid rising living costs.
In response to recent comments from the International Monetary Fund (IMF) regarding Kenya’s economic challenges, including high public debt and balance of payments pressures, Mutiso reiterated the industry’s resilience.
“The digital lending sector will continue fuelling economic growth, attracting investment, and supporting millions of Kenyans on their financial journeys,” he asserted.
The IMF has previously cautioned about Kenya’s liquidity challenges, particularly with the looming repayment of a $2 billion Eurobond in June 2024. But the DFSAK report paints an optimistic picture of grassroots economic activity driven by digital credit.
The growth of digital lending has not been without its hurdles. Prior to the CBK’s regulatory intervention, the sector faced criticism for exorbitant interest rates and aggressive debt recovery tactics.
However, the combination of stricter regulations and self-policing efforts by DFSAK has significantly curbed these practices, fostering greater trust among consumers. The association’s efforts to enhance financial literacy and promote ethical lending practices are also seen as critical steps toward sustaining the industry’s positive impact.
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