The consumer lending market in Kenya exhibited both resilience and optimism in the first quarter of 2024, according to TransUnion Kenya’s Q1 2024 Market Analytics Report. The report highlights how lenders, benefiting from enhanced regulatory frameworks and improved data insights, are better positioned to meet the evolving demands of Kenya’s consumer market.
During the first quarter, the Central Bank of Kenya (CBK) increased the Central Bank Rate (CBR) to 13.0%, up from 12.50%, further impacting the local credit environment. Additionally, the Kenyan Shilling (KES) continued to depreciate against major international currencies, creating a more challenging economic climate for borrowers.
TransUnion Kenya CEO Morris Maina commented, “Q1 2024 could be defined as a quarter of expectation. We anticipated a return of investor confidence and an increased appetite for lending. Active accounts grew marginally by 0.2% quarter-over-quarter (QoQ) but showed a significant 20% year-over-year (YoY) growth, signaling cautious optimism among lenders.”
Mobile Loans Lead Credit Growth
Mobile loans remained the most popular form of credit, representing 52.79% of all active loan accounts, with a total balance of KES 158.8 billion. The first quarter saw the opening of 3.92 million new mobile loan accounts, an increase of 11.02% from the previous quarter. However, the average borrowing limit per borrower dropped by 7.48%, from KES 16.86K to KES 15.6K, reflecting a more measured approach by both lenders and borrowers.
The evolving regulatory environment also contributed to the surge in mobile loans, with licensed FinTechs now sharing data with TransUnion, providing lenders with enhanced insights into consumer creditworthiness.
Low-Value Overdrafts Decline
Low-value overdrafts (ODs), which are vital for accessible credit in Kenya, represented 32.81% of active loan accounts. By the end of Q1 2024, there were 9.84 million active OD accounts with a balance of KES 34.69 billion. However, the number of new low-value ODs decreased by 40.29% to 5.36 million, compared to 8.97 million in the previous quarter. The value of new OD accounts also fell by 32.57%, from KES 6.68 billion to KES 4.5 billion.
Despite this contraction, the average quarterly overdraft limit increased by 12.93%, indicating that while fewer new accounts were opened, the borrowing capacity of existing accounts expanded.
High-Value Overdrafts Tighten
High-value overdrafts accounted for a smaller share of total loan accounts (1.89%) but held a substantial balance of KES 499.1 billion. The number of new high-value overdraft accounts dropped by 25.3%, while their total value decreased by 17.55% to KES 29.36 billion, signaling a tightening of credit and more selective lending practices in this segment.
Banking Sector Dominance
The banking sector continued to dominate Kenya’s lending landscape, holding more than 96% of all loan balances with 27.18 million active accounts. Despite a slight decline in the number of new accounts, the sector remains the backbone of Kenya’s credit market, serving both consumers and businesses.
Asset Finance Growth Amid Contraction
Although asset finance represents only 0.32% of all active loan accounts, it plays a critical role in the economy, with a total balance of KES 200.77 billion. Q1 2024 saw a 27.06% drop in the number of new asset finance accounts, with the total value of new accounts falling by 22.78% to KES 12.84 billion. Despite this, the average quarterly limit grew by 5.86%, signaling continued demand for higher-value financing solutions.
Millennials Lead Credit Consumption
Millennials, aged 25-45, emerged as a key demographic in the credit market, accounting for over half of the mobile loan (51.1%) and personal loan (49.6%) accounts, as well as a significant share of asset finance (16.5%). Their strong presence underscores the importance of financial institutions innovating to meet the unique needs of younger borrowers.
Morris Maina emphasized the dynamic nature of Kenya’s lending market, stating, “While challenges remain, efforts to extend financial inclusion, combined with technological advancements, are shaping the country’s future credit market.”
The TransUnion Q1 2024 Kenya Market Analytics Report provides a comprehensive analysis of the macroeconomic factors and credit trends shaping Kenya’s lending environment.
