Kenya’s microfinance sector plays a critical role in expanding access to financial services for underserved communities, especially in rural areas. With 14 licensed microfinance banks, the Central Bank of Kenya (CBK) has classified these institutions into three categories: large, medium, and small, based on their market share.
Market share is determined using a weighted composite index that takes into account assets, deposits, capital, the number of active deposit accounts, and the number of active loan accounts. As of 2024, five microfinance banks dominate the sector, holding an impressive 83.8% of the market, while six medium-sized and three small microfinance banks account for the rest.
This guide provides a comprehensive list of the largest microfinance banks in Kenya, along with insights into the medium and small institutions that are also making a difference in the sector.
Understanding Microfinance Bank Classification in Kenya
The CBK classifies microfinance banks as:
- Large: Market share of 5% or more.
- Medium: Market share between 1% and 5%.
- Small: Market share below 1%.
These banks cater to individuals and small businesses who often lack access to traditional banking services, offering a range of financial products like loans, savings, insurance, and money transfers. Their services have been crucial in promoting financial inclusion, especially among the low-income population.
The Largest Microfinance Banks in Kenya (2024)
The five largest microfinance banks in Kenya command a substantial portion of the market, providing financial services to millions of Kenyans. Below are the top players in the sector:
| Microfinance Bank | Market Size Index |
|---|---|
| 1. Faulu Microfinance Bank | 31.2% |
| 2. Kenya Women Microfinance Bank (KWFT) | 29.1% |
| 3. SMEP Microfinance Bank | 8.8% |
| 4. Rafiki Microfinance Bank | 8.2% |
| 5. Caritas Microfinance Bank | 8.2% |
1. Faulu Microfinance Bank (31.2%)
Faulu leads the microfinance sector, with a market share of 31.2%. Established in 2009, Faulu was one of the first microfinance institutions to be licensed as a bank. It offers a wide range of products including group and individual loans, asset financing, savings accounts, and insurance products. Faulu’s broad reach across the country and its focus on financial education have contributed to its dominance.
2. Kenya Women Microfinance Bank (29.1%)
Founded to empower women entrepreneurs, Kenya Women Microfinance Bank (KWFT) holds a 29.1% market share. Initially focused on women, the bank now serves both men and women, though its core mission remains the economic empowerment of women through financial services. KWFT offers loans for small businesses, savings accounts, and micro-insurance services tailored to women’s needs.
3. SMEP Microfinance Bank (8.8%)
SMEP Microfinance Bank ranks third with a market share of 8.8%. It provides micro-lending, SME loans, and group savings services. SMEP has been particularly instrumental in serving smallholder farmers and business owners in Kenya’s rural regions, giving them access to affordable credit.
4. Rafiki Microfinance Bank (8.2%)
Rafiki Microfinance Bank ties with Caritas for the fourth spot, holding 8.2% of the market. The bank is known for its innovative digital banking solutions, allowing clients to access loans and savings accounts via mobile banking. Rafiki serves a wide range of customers, from SMEs to individual entrepreneurs.
5. Caritas Microfinance Bank (8.2%)
Caritas Microfinance Bank, launched in 2015, has quickly grown to become one of the largest microfinance institutions in Kenya, with an 8.2% market share. It offers both individual and group loans, savings products, and financial education, with a particular focus on supporting community development initiatives.
Medium-Sized Microfinance Banks in Kenya (2024)
Medium-sized microfinance banks have a market share of between 1% and 5%. These institutions play a crucial role in expanding financial access, particularly in underserved regions and sectors.
| Microfinance Bank | Market Share |
|---|---|
| 1. Sumac Microfinance Bank | 4.3% |
| 2. Branch Microfinance Bank | 2.8% |
| 3. U & I Microfinance Bank | 2.6% |
| 4. LOLC Microfinance Bank | 1.9% |
| 5. Muungano Microfinance Bank | 1.8% |
| 6. Salaam Microfinance Bank | 1.6% |
1. Sumac Microfinance Bank (4.3%)
Sumac Microfinance Bank has steadily grown its market share to 4.3%. Sumac offers personal and business loans, trade finance, and asset financing, serving SMEs and individual clients across the country.
2. Branch Microfinance Bank (2.8%)
Known for its mobile-first approach, Branch Microfinance Bank has captured 2.8% of the market. It focuses on digital lending through its mobile app, allowing customers to apply for and receive loans directly on their smartphones.
3. U & I Microfinance Bank (2.6%)
U & I provides various financial services, including personal loans, SME loans, and savings products. It has a market share of 2.6% and is popular among small business owners and informal sector workers.
4. LOLC Microfinance Bank (1.9%)
LOLC Microfinance Bank has a market share of 1.9%. It offers both micro-loans and savings accounts, with a focus on SMEs and low-income earners.
5. Muungano Microfinance Bank (1.8%)
With a 1.8% market share, Muungano Microfinance Bank serves both urban and rural clients, providing loans, savings, and investment opportunities for small businesses.
6. Salaam Microfinance Bank (1.6%)
Salaam Microfinance Bank focuses on providing Sharia-compliant financial services. With a market share of 1.6%, it caters to Muslim entrepreneurs and businesses across Kenya.
Small Microfinance Banks in Kenya (2024)
The smallest microfinance banks in Kenya have a market share below 1%. Despite their size, these institutions still contribute significantly to financial inclusion, particularly in niche markets.
| Microfinance Bank | Market Share |
|---|---|
| 1. Choice Microfinance Bank | 0.4% |
| 2. Umba Microfinance Bank | 0.1% |
1. Choice Microfinance Bank (0.4%)
Choice Microfinance Bank focuses on providing micro-loans to small businesses and individuals in Kenya. Its market share stands at 0.4%, but it has earned a reputation for offering flexible loan terms.
2. Umba Microfinance Bank (0.1%)
As one of the smallest microfinance banks, Umba has a market share of just 0.1%. Despite its small size, Umba has carved out a niche in digital lending, offering instant loans via mobile platforms.
Challenges and Opportunities for Kenya’s Microfinance Sector
While the microfinance sector has grown significantly in Kenya, it faces several challenges:
- High default rates: Microfinance banks often deal with clients who may have unstable incomes, leading to higher default rates compared to traditional banks.
- Competition from digital lenders: The rise of mobile lending platforms like Tala and M-Shwari has introduced stiff competition in the microfinance space.
- Regulatory pressure: Meeting CBK’s regulatory requirements can be difficult for smaller microfinance banks, particularly those with limited resources.
Despite these challenges, the sector remains a critical part of Kenya’s financial ecosystem, with opportunities for growth in rural areas and among SMEs.
Kenya’s microfinance banks continue to play an essential role in promoting financial inclusion and supporting the growth of small businesses. The five largest institutions—Faulu, Kenya Women Microfinance Bank, SMEP, Rafiki, and Caritas—dominate the sector, but medium and small-sized banks are also making a significant impact.
As the sector evolves, digital technologies and mobile banking are expected to drive further growth and improve access to financial services for more Kenyans. For those looking to engage with Kenya’s microfinance sector, the banks listed above provide reliable options to meet diverse financial needs.
