A growing number of Kenyans are turning away from traditional banks in favour of mobile money loans, according to the latest Global Findex findings referenced by the World Bank. In 2024, 32 percent of adult Kenyans borrowed from mobile money providers. This trend has coincided with a decline in bank-based borrowing, signaling a significant shift in the nation’s credit landscape.
The data reveals that 86 percent of Kenyans who accessed formal loans did so via mobile money platforms, while 25 percent relied exclusively on this channel. By contrast, formal borrowing through banks has noticeably contracted.
Men and women are not borrowing at the same rates: only 16 percent of women tapped into digital wallets, suggesting a persistent gender disparity in financial behaviour and access.
This digital shift aligns with the broader expansion of digital payments in Kenya, where utility bills, agricultural payments, and merchant transactions increasingly move through mobile wallets jumping from 37 percent digital merchant use in 2021 to 56 percent in 2024.
This evolution in borrowing behaviour reflects both the convenience and accessibility of mobile money loan products. Safaricom’s M‑Pesa ecosystem allows users to access credit instantly via options such as Fuliza overdrafts and M‑Shwari loans without traditional collateral or lengthy bank processes.
In parallel, the government‑sponsored Hustler Fund extends microloans validated through mobile networks. Their synergy with agent networks and near-universal mobile penetration has drastically reduced barriers previously posed by physical bank branches.
World Bank analysis shows that the reduction in bank borrowing is partly due to tightened monetary policy, elevated interest rates, and a contraction in private credit. In December 2024, private sector credit contracted by 1.4 percent year-on-year a stark reversal from the 13.9 percent growth seen the previous year highlighting a broader credit squeeze in the traditional banking system.
While the trend boosts financial inclusion and offers rapid access for individuals and small businesses, it raises important regulatory considerations. Mobile lenders often charge higher interest and fees, and may lack robust consumer protection.
The gender gap in uptake further underscores the need for targeted financial literacy and inclusion initiatives.
For formal banks, this evolving consumer preference presents both a challenge and an opportunity. Many are developing digital credit facilities or forming partnerships with fintech companies to remain competitive.
Meanwhile, the shift has implications for monetary policymakers and regulators, who must adapt frameworks to monitor and manage a growing volume of digital credit, ensuring that affordability, transparency and consumer protections remain central to Kenya’s modern financial architecture.
Written By Ian Maleve
