Kenyan Banks Lift MSME Lending 30% to Ksh 424.7 Billion

What changed

Kenyan commercial banks increased lending to micro, small and medium-sized enterprises by 30% in the first nine months of 2026, reaching Ksh 424.7 billion compared with Ksh 326.5 billion in the same period last year. The sector is now close to its Ksh 500 billion full-year target, with Equity Bank leading at Ksh 128 billion, followed by Co-operative Bank at Ksh 60.3 billion and KCB at Ksh 41.1 billion.

Why it matters

The numbers point to a more open credit tap for small businesses. Average lending rates fell to 14.4% in September from 17.2% in November 2024, while the gross non-performing loan ratio dropped to 13.9%, down from 14.8% in June and 17.6% in August 2025.

That combination matters because cheaper loans are easier to take on, and improving repayment gives banks more confidence to keep lending. The Kenya Bankers Association links the change to stronger private-sector demand, healthier business cash flows and easing supply-chain and inflation pressures.

Equity’s lead is especially striking: its Ksh 128 billion in lending exceeded the combined amount from the second- and third-ranked lenders. The broader test now is whether the momentum carries through the rest of the year and takes total MSME lending past Ksh 500 billion.