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Banks Cut Down on Personal Loans, 68% of 2024 Taxes Go to Debt
Banks cut down on issuing personal loans to Kenyans amid high rates of defaults. Kenya uses 68% of its 2024 revenue to pay off debt and interest. 11 banks risk losing their licenses in December over new capital requirements. All this and more in today’s Money Weekly newsletter. But first, a closer look at why banks are cutting down on issuing personal loans to Kenyans.

Hello and welcome to the Money Weekly Newsletter, where we explain why banks are cutting down on giving personal loans to Kenyans.
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Banks Cut Down on Personal Loans
Kenyan banks have, for the first time in seven years, significantly reduced lending to individuals and households. This was largely driven by rising defaults amid high interest rates.
The Central Bank of Kenya (CBK) disclosed that the value of personal loans dropped sharply in 2024, with the value of loans at the end of that year standing at Ksh943.84 billion, compared to Ksh1.082 trillion in 2023. This was a fall of Ksh138 billion.
This contraction highlights how banks are pulling back from unsecured lending, which for years had been one of the largest sources of credit uptake among Kenyans.
The trend also reflects a growing financial strain on Kenyan workers. Many employees have been unable to meet the legal threshold of retaining at least one-third of their salary after mandatory deductions. These deductions include the 2.75% contribution to universal health coverage and the 1.5% housing levy.
The Kenya Bankers Association explained that the retrenchment from personal lending was driven by a surge in non-performing loans (NPLs).
With defaults rising, banks shifted their focus toward sectors backed by stronger collateral.
For instance, lending to industries such as agriculture and real estate was maintained. This is largely because these loans are supported by tangible assets like land.
Meanwhile, the CBK announced the introduction of the new loan pricing model, which will see Kenyans with a good credit score enjoy lower interest rates.
The revised model introduces a pricing formula based on the newly renamed Kenya Shilling Overnight Interbank Average (KESONIA), which replaces the current overnight interbank rate.
The lending rate will now be calculated as KESONIA plus a premium (“K”) that accounts for lending costs, expected returns, and borrower risk.
Here is a quick recap of the top money news for the week:
68% of 2024 Taxes Go to Debt
Kenya spent Ksh1.7 trillion on loan repayments and interest in the 2024/2025 financial year, a report by Controller of Budget Margaret Nyakang’o shows. This accounted for 68% of the Ksh2.5 trillion revenue collected by the Kenya Revenue Authority (KRA) in the year ending June 2025.
In terms of external debt, Kenya spent Ksh361.54 billion to repay principal loans, while Ksh228.37 billion was used for loan interest payments. For domestic debt, Kenya repaid Ksh383.39 billion in principal and paid Ksh768.49 billion in interest.
Catch Up on More News
WEEKLY MONEY TIPS
MONEY254 #MONEYTOK
Govt Proposes VIP Package for Faster Services on eCitizen [E.g Passports]
The government plans to introduce a VIP option on eCitizen that will offer faster services at a higher cost. This premium route will mainly serve urgent cases, such as emergency passport or certificate applications, while the regular option remains available at standard fees.
Other countries, like the U.S., already offer similar fast-track services. Since its launch, eCitizen has onboarded over 22,000 services, handled 11 million transactions in the past year, and processed more than Ksh550 billion.
@money254hq 𝐆𝐨𝐯𝐭 𝐏𝐫𝐨𝐩𝐨𝐬𝐞𝐬 𝐕𝐈𝐏 𝐏𝐚𝐜𝐤𝐚𝐠𝐞 𝐟𝐨𝐫 𝐅𝐚𝐬𝐭𝐞𝐫 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 𝐨𝐧 𝐞𝐂𝐢𝐭𝐢𝐳𝐞𝐧 [𝐄.𝐠 𝐏𝐚𝐬𝐬𝐩𝐨𝐫𝐭𝐬] The government plans to introduce a VIP option on eCitizen that ... See more
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