Firms financing motorcycles, tuk-tuks and smartphones argue that borrowers are more likely to repay loans tied to assets At 6:30am every morning, 29-year-old Peter Mwangi starts his motorcycle outside a single-room house in Nairobi’s pipeline estate before joining hundreds of boda boda riders streaming onto the city’s roads.
Three years ago, Mwangi says he was trapped in a cycle familiar to many low-income Kenyans borrowing small mobile loans to buy food, pay rent and survive between jobs. “I would borrow Sh1,000 today and after a few days you need another loan to pay the first one.
At some point almost all my earnings were going into loan repayment,” he reveals to the Star as he gets ready to start his day. Today, his financial life looks different. Instead of taking short-term digital loans, Mwangi now makes daily repayments on a motorcycle he acquired through an asset-financing programme.
He says the bike generates the income that pays for itself and at the end of the repayment period, he will own it outright. His experience reflects a growing shift in Kenya’s lending market, where industry players are increasingly questioning whether the country’s booming digital credit sector is helping households build wealth or trapping them deeper in debt.
Industry data shows Kenya’s digital lenders disbursed an estimated Sh180 billion in 2024 to more than eight million active borrowers every month. But the rapid rise of instant mobile loans has also coincided with mounting defaults, aggressive debt collection practices and widespread blacklisting at credit reference bureaus (CRBs).
According to data from the Digital Financial Services Association of Kenya (DFSAK), some unregulated lenders charge annualised interest rates averaging 280.5 per cent, with certain platforms reaching as high as 520 per cent once penalties and hidden fees are factored in.
The fallout has been severe. More than 14 million accounts have been negatively listed with CRBs, effectively locking around three million Kenyans out of formal credit access. Consumer complaints against lenders rose 28 percent in 2025 compared to the previous year, while an estimated 800,000 borrowers are juggling multiple loans simultaneously.