In the 2023–2024 period, Kenya recorded significant growth in mobile money services, with the penetration rate increasing from 75.1% to 77.3%. This digitalization growth also saw smartphone usage rise by approximately 14%, alongside increased demand for short-term unsecured loans from digital lending apps.
The growing demand for digital loans from microfinance institutions like Positiviti Lending reflects the fact that many Kenyans are unbanked or underbanked. A 2024 report published by the World Bank Group noted that approximately 79% of adults in Kenya had a financial account in 2021. While this percentage was higher than those recorded in Mali, Senegal, and Sub-Saharan Africa, a majority of Kenyans primarily registered for mobile money services rather than traditional bank accounts.
The number of Kenyans using mobile money services was nearly triple that of those with only a bank account. Many respondents in the survey stated they adopted mobile money services first because “they did not have enough money” for a traditional bank account. However, mobile money services allow users to send or receive amounts as low as Ksh 10 (less than a dime). The best part is that the major players in this market typically do not charge users for transactions at or below Ksh 100 (about $0.80).
Traditional Banks in Kenya Joining the Growing Microlending Sector
While 2024 was a good year for Kenya's microfinance and microlending market, traditional banks faced challenges. Several banks in the region dropped in Africa’s top banking rankings, primarily due to rising non-performing loan ratios. For instance, Equity Bank, a major financial institution with $11.6 billion in assets, saw its loan ratio decline from 7.7% to 7%.
According to The Africa Report, the primary cause of this decline was "persistent poor credit quality." More people are turning to micro-lending institutions like Positiviti Lending because they provide loans without requiring significant assets or high credit scores.
In response to the shifting lending landscape, Kenyan banks are also venturing into microlending to capture a share of the market. Standard Chartered, for example, recently launched a digital loan app, SC Juza, for its customers. This app offers short-term unsecured loans disbursed through mobile wallets, complementing its already well-regarded 5-star app for general banking services.
More Digital Credit Companies Apply for Licenses in Kenya
The microlending market is rapidly growing worldwide, with financial experts projecting its global market size to reach nearly $400 billion by 2029 at a compound annual growth rate (CAGR) of 13.0%. However, at the current growth rate, the market could achieve this value in as little as two years.
Within Africa, Kenya boasts one of the continent's largest microlending markets, with a significant increase in the number of digital lenders. In the last quarter of 2024, the Central Bank of Kenya (CBK), responsible for monetary policy and financial regulation, reported receiving 500 applications from digital credit companies for operating licenses. This number far exceeds the 39 commercial banks currently operating in the country.
Kenya’s attractiveness as a microfinance hub explains why companies like Positiviti Lending prioritize the region. Their success stems from offering low-interest products, fostering local partnerships, and employing both in-person and digital marketing strategies.
Significant Growth in Mobile Money Services and Smartphone Use in 2024
One major driver of Kenya's thriving microfinance sector has been the adoption of mobile money services. This growth aligns with expectations, considering Kenya’s pioneering role in mobile money through M-PESA, launched by the country’s telecom giant Safaricom in 2007.
During the 2023–2024 fiscal year, the Communications Authority of Kenya (CAK) reported 39.8 million mobile money subscriptions and a penetration rate of 77.3%. This marked a notable increase compared to the 2022–2023 period when subscriptions stood at 38 million with a penetration rate of 75.1%.
Mobile money services are critical to microlending operations as digital credit companies use these platforms to disburse loans. Positiviti Lending, like many digital lenders, has integrated its microloan platform with Safaricom’s ecosystem, enabling qualified borrowers to receive loans directly to their M-PESA wallets.
While Positiviti Lending employs over 200 field agents for in-person marketing, its largest market share is achieved through digital platforms. On this front, the company offers loans ranging from $5 to $500 via the AFRECASH mobile app—a product of its local partnership with AFRESA Credit Union.
Rural Kenyans are increasingly adopting smartphones, contributing to the sector’s growth. In the 2023–2024 fiscal year, the number of registered smartphones rose to 35.2 million, up from 30.8 million in the 2022–2023 period—a 4.4 million increase. This shift has led to an expansion in AFRECASH users and allowed Positiviti Lending to positively impact the lives of more Kenyans, particularly those seeking capital for their ventures.
