NAIROBI, Kenya, Sep 2 – Kenya’s microfinance sector is shifting towards digital channels as lenders seek to reach more borrowers through mobile platforms, with technology increasingly becoming part of how credit is marketed, accessed and delivered.
The transition is changing the relationship between lenders and customers, particularly for individuals and small businesses that may not have easy access to conventional banking networks.
OYA Micro-Credit Kenya Chief Executive Officer Wycklife Ochola said technology was becoming an important tool for widening access to financial services.
“Digital inclusion is not simply about putting services online. It is about ensuring that people can use technology to access opportunities, information and financial services that can improve their lives,” Ochola said.
The move towards digital lending is also changing the cost and reach of microfinance businesses, allowing lenders to process applications and communicate with customers without relying entirely on physical outlets.
But the expansion of digital finance is taking place alongside concerns over borrowers’ understanding of financial products and their ability to manage digital credit.
Ochola said financial education would have to accompany the shift to online financial services.
“As we take more services online, we also have a responsibility to educate customers. People need to understand the products they are accessing and make informed decisions about how they use financial services.”
Data from the Central Bank of Kenya (CBK) and the 2024 FinAccess Household Survey shows the scale of the change.
The number of adults using microfinance institutions rose to about 2.5 million in 2024, from about 400,000 in 2021.
However, the composition of microfinance usage has changed sharply.
Traditional microfinance users fell to 212,772 in 2024 from 455,350 in 2021, while adults using digital loans obtained through phone applications increased to 668,491 from 583,263 over the same period.
Hire-purchase and “Lipa mdogo mdogo” services recorded an even larger increase, reaching 1.75 million users in 2024 from 579,242 in 2021, according to FinAccess.
The wider digital credit market has also expanded under CBK supervision.
The regulator’s latest directory lists 127 licensed digital credit providers as of August 14, 2026, compared with 51 in March 2024.
CBK began licensing and supervising digital credit providers following amendments to the CBK Act in 2021, with the Digital Credit Providers Regulations taking effect in March 2022.
The growth means microfinance lenders are operating in a more competitive market, where wider digital access is increasingly being matched by greater scrutiny of responsible lending, consumer protection and the affordability of credit.
