Kenya’s banking industry disbursed KSh 245.1 billion in new loans to micro, small and medium enterprises (MSMEs) during the first half of 2026, the Kenya Bankers Association (KBA) has said, as lenders expanded financing for business expansion, working capital and job creation.
According to the KBA, lending to MSMEs rose steadily over the six months to June, reflecting increased financing activity across the sector. Equity Bank led the lenders with Ksh 82.3 billion in new MSME loans, followed by Co-operative Bank at Ksh 32.4 billion, KCB at Ksh 26.4 billion, Family Bank at Ksh 21.6 billion and NCBA with Ksh 17.7 billion, while I&M, Absa, Kingdom Bank, Diamond Trust Bank and National Bank of Kenya also featured among the top 10 lenders.
The half year figure follows a record 2025, when Kenya’s banking sector extended Ksh 326.5 billion in new loans to MSMEs, more than double the industry’s annual target of Ksh 150 billion. Equity Bank was also the market leader that year, disbursing over Ksh 90.7 billion. Looking ahead, KBA has reaffirmed an industry commitment to lend Ksh 300 billion in new loans annually to MSMEs over the 2026 to 2028 period.
Officials have linked the lending momentum to broader monetary easing. The Central Bank of Kenya extended its easing cycle into 2026, lowering its benchmark rate by a further 25 basis points to 8.75 percent in February, marking the tenth consecutive cut. KBA officials have also pointed to private-sector credit growth reaching 10.6 percent in June, though they noted stronger demand was still needed to sustain momentum.
KBA has also flagged fiscal policy as a lever for further credit expansion. The association’s projections indicate that a five percent reduction in PAYE could release more than Ksh 28.1 billion into the economy annually, generate up to Ksh 42 billion in immediate GDP output, support more than 36,000 jobs, and unlock at least Ksh 140 billion in formal lending capacity.
