Nairobi — A new report has revealed a troubling spike in loan defaults across Kenya, with one in every six adult borrowers having failed to repay their loans in 2024.
The findings, published in the latest FinAccess Household Survey, reveal that 16.6 percent of borrowers defaulted last year, up significantly from 10.7 percent in 2021.
This increase coincides with a sharp rise in mobile and digital lending, which has made credit more accessible than ever, especially among young and first-time borrowers.
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Financial services provider TransUnion Kenya has now raised concerns over the growing financial risks, urging Kenyans, particularly the under-35 demographic, to take proactive steps in managing their credit health through its free mobile tool, Nipashe.
TransUnion Kenya CEO Morris Maina noted that while access to credit can open doors to education, entrepreneurship, and financial mobility, lack of financial literacy could trap many borrowers in debt cycles that ultimately harm their economic prospects.
"Credit, when used wisely, can be a powerful enabler," said Maina.
"But without a solid foundation in financial literacy, we risk seeing many young people excluded from future economic opportunities because of poor credit decisions made today."
The survey further shows that while formal financial inclusion has risen to 84.8 percent of Kenyan adults, the gap in understanding how credit works remains a serious challenge.
Millions now rely on mobile loans as their first interaction with credit, yet many lack awareness of key concepts like interest accumulation, repayment terms, and the long-term impact of defaulting on one's credit record.
In response, TransUnion is encouraging borrowers to use the Nipashe platform, a mobile app and SMS-based service that allows individuals to check their credit reports, monitor their credit scores, and receive personalised financial advice.
Users can download the app or access the service by sending their name via SMS to 21272.
According to Maina, such tools are critical in helping young Kenyans avoid costly financial mistakes and build a healthy credit history from the outset.
He added that fostering responsible borrowing habits isn't just beneficial for individual well-being--it contributes to national economic stability.
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To support first-time borrowers, TransUnion is also sharing practical guidance to help them get started, including the importance of checking one's credit status early, borrowing only what one can afford to repay, avoiding credit for non-essential spending, and understanding how credit scores are calculated.
TransUnion contends that without early intervention and accessible financial education, the number of defaulters could continue to rise, placing millions at risk of long-term exclusion from the formal financial system.
According to the Digital Financial Services Association of Kenya (DFSAK), Kenyans borrowed an average of Sh500 million daily, accumulating roughly Sh15 billion per month through digital lending channels in early 2025.
Over 8 million Kenyans, or around 16 percent of the population, are active digital borrowers each month.
In 2024, DFSAK data shows the sector disbursed approximately Sh180 billion in total. However, between Sh54 and Sh72 billion of that sum, equivalent to default rates of up to 40 percent, was written off due to non-performances.
By contrast, defaults on commercial bank loans remained around 16.4 percent at the end of December 2024.
