More than 4 million Kenyans, or 14% of the adult population, have been denied mobile loans, according to data from Financial Sector Deepening (FSD) Kenya.
The Credit Referencing Bureau (CRB) Metropol shows that mobile loans face the highest rejection rate at 33.7%, followed by mobile money providers at 16.9%.
High Borrowing Costs Linked to Defaults
Speaking at the National Credit Market Convention, Metropol Managing Director Sam Omukoko said high borrowing costs are driven by rising interest rates and Non-Performing Loans (NPLs).
He explained, “Lenders see high risks of default in Kenya and across Africa. To compensate for this risk, interest rates remain high.”
This has created a trust gap in the credit market. Lenders are cautious, and many borrowers struggle to access loans.
Digital Lenders Use AI and Data
Kevin Mutiso, Chairman of the Digital Financial Services Association of Kenya (DFSAK), said digital lenders are improving credit decisions.
“In the informal sector, cash is still moving. Growth is slower, but we’ve seen fewer non-performing loans,” he said. “This is because we are using CRB data and AI algorithms to assess credit risk better.”
The Road Ahead
Experts say technology and better data use can help restore trust between borrowers and lenders. Digital lenders refining their tools may allow more Kenyans to access affordable loans.
The report highlights the need for balanced lending reducing risk for lenders while increasing financial access for borrowers.
