Eighteen things about credit in Kenya that are worth knowing, each with where it comes from. Where a figure is an estimate rather than a published statistic, it says so — the point of a facts page is that you can check it.
M-PESA and mobile money
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M-PESA was originally built to collect microfinance loan repayments.
The pilot, run with Faulu Kenya before the commercial launch in March 2007, was designed for disbursing and repaying microloans over the phone. The person-to-person transfers that made it famous were what pilot users actually did with it. Nearly twenty years later, the original use case is still the one this whole knowledge base is about.
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The name is half English and half Swahili.
M for mobile, pesa for money.
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So is the name of the API.
Safaricom's developer platform is called Daraja — Swahili for bridge. It is the interface behind every automatic paybill reconciliation in the country, and it is the thing a lender is really buying when a vendor says "M-PESA integration". See how that works.
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A paybill has an account number field. A till number does not.
That one difference is why lenders collect on paybill and shops collect on till. Without a reference field there is nothing to match a payment to a loan with, and reconciliation becomes a person comparing phone numbers.
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Kenya has more mobile money agents than most countries have bank branches, by a very wide margin.
The Communications Authority of Kenya's quarterly sector statistics have reported agent numbers in the hundreds of thousands for years. The practical consequence for a lender is that cash-in and cash-out are a solved problem almost everywhere, and the remaining hard part is the record-keeping.
Groups, savings and the informal sector
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Kenya has the largest SACCO movement in Africa.
SASRA-regulated deposit-taking SACCOs number in the high hundred-and- seventies, and they are a small fraction of the total number of registered co-operative societies. Most SACCOs are supervised by the Commissioner for Co-operative Development rather than by SASRA — see who regulates whom.
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Chamas are commonly estimated to hold hundreds of billions of shillings.
Figures around 300,000 groups and roughly KES 300 billion are widely cited in the Kenyan press and by industry associations. They are estimates of an informal sector rather than a published statistic, and should be treated as an order of magnitude rather than a number.
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The "merry-go-round" is a rotating savings and credit association, and it is older than banking.
Members contribute a fixed amount at each meeting and the whole pot goes to one member, in rotation. Variants of the same structure exist under different names on every continent. Nobody needed a credit score to invent it.
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Table banking lends the money out before the meeting ends.
Members' savings are collected and immediately loaned to members who need them, at the same sitting. It is the fastest loan cycle in existence and it works for exactly one reason: everybody in the room knows everybody else. That is also the mechanism formal group lending is trying to rent.
Rules and regulators
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Kenya capped interest rates for three years, then stopped.
The Banking (Amendment) Act, 2016 capped lending rates at four percentage points above the Central Bank Rate. The cap was repealed with effect from November 2019. The episode is still the most-cited natural experiment in African credit policy, largely because lending to small borrowers contracted rather than becoming cheaper.
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Digital lenders became formally licensed in 2022.
The Central Bank of Kenya (Digital Credit Providers) Regulations brought digital credit providers into licensing, with the first licences issued in March 2022. A large number of businesses that thought of themselves as technology companies discovered they were regulated lenders.
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Three credit reference bureaus are licensed in Kenya.
TransUnion, Metropol and Creditinfo. The first bureau licences were issued in 2010.
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The Data Protection Act applies to lenders nobody else regulates.
It came into force in November 2019 and attaches to the processing of personal data, not to holding a licence. A two-branch credit-only lender has the same duties over a borrower's ID number as a bank does. See the Act, for lenders.
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SHIF is a percentage. NHIF was a table.
The Social Health Insurance Fund replaced NHIF from October 2024 and is charged as a percentage of gross pay rather than looked up in a band table. Any payroll still holding the old bands is not out of date; it is producing wrong numbers. See PAYE, SHIF and NSSF.
Numbers, history and one piece of trivia
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Formal financial inclusion in Kenya is around 85%.
The FinAccess Household Survey — run by the Central Bank of Kenya, KNBS and FSD Kenya — has tracked this since 2006, when the figure was around 26%. Almost all of the change is mobile money.
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Double-entry bookkeeping was published in 1494 and has not needed a revision.
Luca Pacioli described it in Summa de Arithmetica, printed in Venice. Every ledger in this article's subject matter is the same idea: two sides, always equal, nothing deleted. See why your loan book and your ledger disagree for what happens when a system only pretends to do it.
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Group lending won a Nobel Peace Prize.
Muhammad Yunus and Grameen Bank shared the 2006 Nobel Peace Prize for work on microcredit built on joint-liability groups — the same mechanism a Kenyan chama loan runs on.
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The shilling still has 100 cents, and you will never see one.
Cent-denominated coins have long been out of circulation, but the subdivision remains — which is why every money column in a well-built lending system is stored to two decimal places and never as a floating point number. Interest calculations produce fractions of a shilling whether or not anybody can pay one.