The Kenya Microfinance Industry (“the Industry”) remains a critical pillar in advancing financial inclusion and supporting micro, small and medium enterprises (MSMEs) and underserved communities. However, the Industry continues to evolve beyond traditional microfinance, driven by rapid digital transformation, regulatory reforms and increasing competition from commercial banks and other non-bank lenders. While Kenya’s economy is projected to expand by 5% in 2026, creating a more supportive environment for credit growth, the Industry continues to navigate structural challenges, including elevated credit risk, rising regulatory expectations and capital constraints among Microfinance Banks (MFBs). The MFB segment remained under pressure in 2025, reflecting persistent structural business model challenges, including intensifying competition from other credit providers such as commercial banks that have expanded access to loans through technology-driven lending models. Conversely, credit-only microfinance institutions (COMFIs) continued to demonstrate resilience, serving over 1.9 million customers and maintaining steady growth, supported by expanding MSME financing, digital delivery channels and improved access to funding. Looking ahead, the Industry is expected to gradually transition towards sustainable recovery, underpinned by improving macroeconomic stability, stronger risk management, continued digital innovation and enhanced regulatory oversight. Nevertheless, the pace of recovery is likely to remain uneven as microfinance institutions contend with persistent asset quality pressures, evolving consumer protection requirements and the need to strengthen capital, governance and operational resilience in an increasingly competitive financial services landscape.
Coverage of the 2026 Kenya Microfinance Industry Report
