Kenya’s 14 CBK-licensed deposit-taking microfinance banks (DTMs) posted their first year-on-year deposit increase since 2021, per Central Bank of Kenya data, rising 5.3% to Sh44.15 bn in FY’2025 from Sh41.92 bn in FY’2024. This follows a multi-year contraction independently confirmed by CBK’s own Financial Sector Stability Report, which recorded the sector’s asset base falling to a decade-low in FY’2024, its third consecutive year of decline and the weakest level since 2014.
The prior downturn was structurally driven. Net loans and advances fell 16.8% year-on-year to Ksh31.2 bn, while gross loans contracted 16.2% in 2024 versus an 8.3% decline in 2023, reflecting weakening credit uptake. Profitability remained a persistent constraint: the sector posted a Ksh3.5 bn net loss in December 2024, its ninth consecutive annual loss, with only three of the 14 licensed MFBs profitable and three institutions accounting for nearly 88% of total sector losses. A separate CBK-sourced account corroborates the earnings picture at institutional level, noting that only four MFBs were profitable in 2024 U&I (Sh84 mn), Caritas (Sh50 mn), Choice (Sh44 mn), and Sumac (Sh1 mn) while Kenya Women Microfinance Bank, Faulu, and SMEP posted the largest losses.
The recapitalisation trend cited as the recovery driver is also independently verifiable: at least six MFBs including SMEP, Maisha, and the institution formerly known as Key sought new capital over the preceding three years by selling stakes to new investors, consistent with the ownership-change pattern behind the FY’2025 uptick.
Two qualifications stand: first, the FY’2025 deposit-growth figure itself is currently attributable to a single outlet’s access to CBK data and has not yet been independently corroborated elsewhere; second, structural headwinds — elevated non-performing loans and intensifying competition from fintechs, telcos, and government-backed lenders encroaching on the sector’s traditional small-scale lending niche remain unresolved even if the deposit base has stabilised. (Start your investment journey today with the cytonn MMF, call+2540709101200 or email sales@cytonn.com)
