Report on the Competition Authority of Kenya Digital Credit Market Inquiry

Digital credit emerged in Kenya in 2012 with the introduction of M-Shwari from Commercial Bank of Africa (now NCBA) and Safaricom. In the 9 years since, the digital credit sector has grown such that at different points there have been as many as several hundred lenders estimated to be operating in the Kenyan market,1 although the number of lenders has reduced during the COVID-19 pandemic as lending has contracted.2 While the majority of digital lenders are unregulated, the vast majority of lending volume and value are provided by a small number of regulated banks, most noticeably the three products listed on Safaricom’s M-PESA mobile money menu, M-Shwari, Fuliza, and KCB M-PESA. The market is therefore at once diverse in terms of number of providers, but with most the value and volume concentrated with products delivered by several large commercial banks. To support the objectives of the Market Inquiry, CAK and IPA conducted two complementary research activities: 1. A phone survey of 793 users of digital financial services (DFS) from across Kenya. 2. An audit and analysis of transaction and account-level data of regulated and unregulated digital credit providers