In July 2026, private-sector credit growth reached 10.6 percent the highest since February 2024. Total private-sector credit rose to Sh4.15 trillion. This growth is partly attributable to 10 consecutive Central Bank of Kenya (CBK) rate cuts, which reduced the benchmark rate from 13 percent to 8.75 percent.
As rates fell, average commercial lending rates declined from 17.2 percent in 2024 to about 14.3 percent in July 2026, while inflation and exchange-rate stability improved. However, there is serious work to do to make the credit market in Kenya more effective.
First, non-performing loans (NPLs) remain high at about 15.5 percent. The portfolios with disproportionately high NPLs in 2026 include agriculture, trade, manufacturing and traditional consumer lending. One category that is doing well in Kenya is digital consumer lending products, which have lower NPL rates.
Second, financial health among individuals and small businesses is worsening. FSD Kenya reports that the share of adults able to manage daily needs, absorb a financial shock and invest in their future fell from about 36 percent in 2016 to 18.3 percent in 2026.
Credit reference bureau (CRB) data shows that loans to men were nearly twice those o women in the period between 2019 to 2026, even when women recorded lower default probabilities.
Additionally, only 3.5 percent of lending was advanced to agriculture, despite agriculture contributing about 23 percent of Kenya’s GDP.
The same structural gap is visible in MSME lending. While there is private sector credit growth, MSME loan accounts is declining. As at end of July 2026 , only 6 percent of bank loan accounts were to MSMEs, translating to 4 percent of Kenya’s 3.8 million operating businesses.
This is the real reason Kenya’s private sector credit-to-GDP ratio remains about one-third of GDP, compared with in other markets; it is 70 percent in Mauritius and 90 percent in South Africa.
Can these structural misalignments be addressed through better information and incentives? In 2026, CBK rolled out a new Credit Risk Pricing Framework. We can observe that lower interest rates can stimulate credit. The next phase of development will depend on both the price of money and the quality and coverage of information used to allocate it. At the heart of this challenge is trust.
In credit, a lender advances money today in exchange for a promise of repayment tomorrow. Where this information is incomplete, commercial banks in Kenya shy away from lending. What happens there after is that informal lenders take over. These informal lenders compensate the lack of information by charging higher rates and by demanding more collateral.
Kenya’s opportunity is to convert more economic activity into trusted, verifiable information. The Open Finance framework, which has been in the works from mid-2025 and targeting full compliance by January 2027, will allow customers to authorise lenders to access verified financial information held by different institutions.
Trust can also be strengthened through technology. The growth of digital credit providers (DCPs) demonstrates what becomes possible when large volumes of alternative data are analysed in real time.
This is the foundation of a more connected credit market. When information is shared with consent, verified and used consistently, uncertainty falls. When uncertainty falls, the cost of assessing risk falls.
This creates room for better pricing, more appropriate products and greater access to credit. Kenya’s next credit-market opportunity is to create a trusted information ecosystem in which more economic activity becomes visible, verifiable and financeable.
The National Financial Inclusion Strategy 2025-2028 and the new Consumer Protection Framework, developed across seven regulators, provide a basis for wider information sharing. Agriculture lending will be a big beneficiary. Better information sharing can reveal the links between farmers, processors, traders and buyers within the same value chain.
A farmer’s repayment history, production records, sales, mobile-money flows and relationships with processors will be able to provide a fuller picture of creditworthiness than collateral alone.
With harmonised reporting rules, lenders can also develop products that reflect agricultural cash flows rather than forcing farmers into products designed for monthly salaries. This can address some of the prudential and product challenges that currently affect agricultural lending.
DCPs have rapidly expanded access, with more than 8.37 million loans worth over KSh150 billion disbursed. Their use of algorithms and data-driven credit assessment shows that credit decisions can increasingly be based on observed behaviour rather than assumptions about entire categories of borrowers.
The next step is to build trust across the financial ecosystem. Trust should become a currency that allows institutions to share information, technology, risk and balance-sheet capacity.
A lender with capital but limited technology can use a technology platform operated by another institution. A business with receivables can use verified transaction data to secure financing. A risk-sharing arrangement can allow several institutions to participate in a transaction while relying on common information.