Kenya is a country that runs on hustle, and nowhere is that more evident than in the world of digital lending, where every single day, eight million Kenyans borrow a combined Sh500 million.

That’s a whopping Sh15 billion a month, proving that when times get tough, digital lenders serve as the safety net keeping businesses and families afloat when the likes of banks and relatives can not help.

A new report by the Digital Financial Services Association of Kenya (DFSAK) lays it all out. From fueling side hustles to keeping boda boda riders on the road to covering school fees, these non-deposit-taking lenders have become the backbone of everyday transactions in Kenya.

Whether it’s a boda rider getting back on the road, a shopkeeper stocking up for the day, or a student unlocking a world of knowledge on their new smartphone, one thing is clear—Kenya is borrowing, spending, and thriving, one digital loan at a time.

DFSAK Chairman Kevin Mutiso emphasized the sector’s impact, stating, “The digital lending industry has become crucial for growth—attracting foreign investment, creating jobs, taking risks, and lifting millions out of poverty.”

The report reveals how digital lenders are driving financial inclusion, financing an average of 100,000 smartphones monthly, significantly increasing internet access and digital participation.

The sector’s data aligns with other findings, including a report by the Central Bank of Kenya (CBK) FinAccess, which revealed that 64 per cent of Kenyans rely on credit for survival.

While this underscores the strength of Kenya’s digital financial systems, it also paints a grim picture of an economy marked by shrinking disposable incomes and a heavy tax burden.

Despite recent interventions by the Kenya Kwanza government, including efforts by the CBK and the Treasury to boost liquidity, relief has yet to trickle down to the ordinary citizen.

On February 5, following a Monetary Policy Committee (MPC) meeting, the CBK slashed the Central Bank Rate (CBR) to 10.75 per cent and reduced the Cash Reserve Ratio (CRR) to 3.25 per cent from 4.25 per cent. This move was aimed at increasing money supply in the economy by encouraging commercial banks to lower lending rates, making credit more affordable for the private sector.

However, these interventions have yet to make a noticeable impact on the daily struggles of Kenyans, who continue to feel the pinch of a tough economic climate shaped by high taxation.

Change in business laws

DFSAK, however, welcomes the Business Laws (Amendment) Act 2024, which took effect in January, bringing digital credit providers under CBK regulation. According to the association, this has provided much-needed clarity to the industry while enhancing consumer protection.

The once-troubled sector has already seen consumer complaints drop from 4,000 a month to just a handful after adopting a stricter code of conduct. DFSAK is also collaborating with the Office of the Data Protection Commissioner to establish further safeguards for borrowers.

Currently, the association is focusing on tax reforms, particularly around bad debt allowances, to improve industry sustainability.

After strengthening its board with the addition of 4G Capital and M-Kopa, DFSAK now has seven board representatives, including members from Aspira, Kuwazo, Oye Platform Solutions, Tala, and Zenka.

“Kenya remains at the forefront of Africa’s digital lending revolution, driven by high mobile penetration and a growing demand for accessible financial solutions,” Mutiso added.

Responding to the International Monetary Fund’s (IMF) recent comments on Kenya’s economic challenges, he reiterated that the digital lending industry will continue fueling economic growth, attracting investment, and supporting millions of Kenyans on their financial journeys.