2022 Kenya Microfinance Industry Report

Overview of the Report

Over the last 10 years, there have been a continued growth in the Microfinance Industry (‘Industry’) and Agusto & Co. estimates that the Kenyan Microfinance Industry (comprising the Microfinance Banks, Credit-Only Microfinance Institutions and Wholesale Microfinance Institutions) as of end of December 2021 had total assets of approximately KES 250 billion. We expect that the industry’s assets will grow by an average of 2% in 2022 driven by the economic recovery and the easing of lending measures by microfinance institutions. Additionally, competition has remained a major force in the growth of the industry and microfinance institutions must develop a set of externally oriented competencies in the areas of market research, competitive advantage analysis, digitization and innovative product offerings to thrive in the face of increasing local and foreign competition.

Key excerpts from the 2022 Kenya Microfinance Industry Report

• Potential restructuring of the Industry as most fringe credit-only microfinance institutions may be unable to comply with the new regulatory directives (Digital Credit Providers License) from the Central Bank of Kenya (CBK) and will possibly be forced into a merger or be acquired by stronger organizations.
• The proposed Microfinance Industry regulations being championed by the Association of Microfinance Institutions (AMFI) Kenya will provide a supervisory framework to guide the institutions who have remained unregulated till now and provide credibility to the Industry.
• Heightened business risks relating to delinquencies, governance as well as changes in the regulatory and political environment following the upcoming elections, could impact near term performance.
• Increased interest in the Microfinance industry from foreign investors to broaden their financial services offering in Kenya and the region.
• Access to low cost funding and innovative Route-To-Market strategies amongst others were identified as key success factors in the Industry.

The 2022 Kenya Microfinance Industry report covers the following:

• An overview of the Kenyan Microfinance Industry
• The competitive landscape and analysis of the bases of competition
• The regulatory environment and evaluation of the upcoming regulations
• An assessment of the Financial Condition of the Industry
• Key developments and trends in the Industry
• Strengths, weaknesses, opportunities and threats to the Industry
• Key success factors and risk areas
• Industry Risk Rating
• Industry Outlook