Kenya’s consumer lending market showed mixed signals in the first quarter of 2024, with mobile loans gaining prominence while traditional credit options faced some challenges. According to TransUnion Kenya’s Q1 2024 Market Analytics Report, the volume of new mobile loans increased by 11.02% quarter-over-quarter, now accounting for 52.79% of all active loan accounts in the country.
This surge in mobile lending comes as other credit options, such as low-value overdrafts and asset finance, experienced considerable contractions. New low-value overdraft accounts decreased by 40.29%, while the total value of new asset finance fell by 22.8% compared to the previous quarter.
Morris Maina, CEO at TransUnion Kenya, described Q1 2024 as “a quarter of expectation,” noting, “We anticipated a return of investor confidence and an increased appetite for lending. To this end, active accounts grew by a small margin of 0.2% quarter-over-quarter, but with a significant year-over-year growth of 20%. This reflects a cautious optimism among lenders as they started to regain confidence in the market.”
The rise in mobile loans can be attributed partly to the evolving regulatory environment, with licensed FinTechs now submitting data to TransUnion. This development has provided lenders with better insights into the overall market and consumer health, enabling more informed decision-making on credit applications.
Despite the increase in mobile loan volume, the average quarterly borrowing limit per borrower decreased by 7.48%, from Ksh. 16,860 to Ksh. 15,600. This implies a measured approach by both lenders and borrowers in response to the current economic climate.
The banking sector remains the backbone of Kenya’s credit market, holding more than 96% of all loan balances and accounting for 27.18 million active accounts. However, the sector saw a slight decline in the number of new accounts opened during the quarter.
Millennials (25 – 45 years old) continue to emerge as a driving force in the credit market, accounting for substantial portions of principal amounts across various loan categories. They now represent 51.1% of mobile loans, 49.6% of personal loans, and 16.5% of asset finance.
“Kenya has a dynamic and evolving lending market, with diverse credit products and solutions available that respond with agility to consumers’ and businesses’ needs,” Maina stated. “While some challenges remain, efforts towards extending financial inclusion even further, along with technological advancements, are shaping the country’s future credit market.”
During Q1 2024, the Central Bank of Kenya raised the Central Bank Rate to 13.0%, up from 12.50% in the previous quarter. Additionally, the Kenyan shilling continued to depreciate against major international currencies, further influencing the local credit environment.
