Why Kenyans Borrowed Sh629.2 Billion Through Fuliza in Six Months

Kenya’s financial landscape has fundamentally shifted, with digital overdrafts becoming the primary source of short-term liquidity for millions. This market is dominated by competition between traditional banks and agile telcos, all vying to satisfy a critical need when a user’s mobile money balance runs dry.

Safaricom’s Fuliza remains the unchallenged leader, posting staggering numbers that illustrate the market’s dependence:

• In the six months to September 2025, Kenyans borrowed Sh629.2 billion through Fuliza.
• This represents a substantial 39.8 percent increase from the previous year.
• Active users reached 9.1 million, with the average loan size remaining small at Sh254.60.

These figures underscore a wider economic tension, showing that households rely on these instant credit loops built into everyday mobile transactions to navigate rising living costs and volatile incomes.

The entry of major banks signaled a push for regulatory sustainability and ground reclamation from fintech platforms. When the Co-operative Bank of Kenya launched its platform, Kamilisha, it joined the fray led by Safaricom and Equity Bank’s Boostika.

• Kamilisha allows users to overdraw up to Sh100,000 instantly.
• The pricing model is aggressively competitive: a two percent access fee plus a daily rate of 0.2 percent on the outstanding balance, positioning it favorably against Fuliza.

This convergence reflects a new financial ecosystem where credit, payments, and telecom infrastructure have merged, forcing banks to adopt the agility of telcos and telcos to rely on bank partnerships (KCB, NCBA) for regulatory footing.

Despite the ease of access, the digital lending sector faces a looming sustainability challenge centered on high default rates:

• Licensed digital lenders disbursed over 5.5 million loans worth Sh76.8 billion by mid-2025, nearly triple the 2023 figure.
• However, defaults among digital loans hover dangerously close to 40 percent, compared with only 16 percent for traditional bank credit.
• In the microloan segment (typically under Sh1,000), defaults can escalate to 80 percent.

These figures highlight the fragility of a system that prioritizes immediate, repetitive access over strict repayment discipline.

The Central Bank of Kenya (CBK) has stepped up oversight to manage these risks. Following the 2022 framework, the number of licensed digital lenders surpassed 150 (specifically, 153 firms approved by late 2025), necessitating mandatory licensing, fee disclosure, and data protection compliance.

For regulated players like Co-op and Equity, compliance offers a competitive edge and potentially greater public trust. As the CBK contemplates tighter rate caps, margins may compress, but the overall market stability could improve. Kenya’s digital overdraft market remains a dynamic mirror of its economy: fast, adaptive, and precariously balanced between financial innovation and widespread consumer dependency.