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February 2, 2026 | Regulatory, Compliance & Licensing | By Credence Africa

The Growth of Africa's Digital Lending

The Growth of Africa's Digital Lending





In 2024, the Central Bank of Kenya approved 42 more Digital Credit Providers to operate in the country bringing the total number of licensed lenders to 195 from over 800 applications since March 2022.

Kenya now has 195 licensed lenders serving 50 million people while other countries like Nigeria have approved 436 digital lenders, Ghana launched its licensing regime in September 2025, with applications opening in November and South Africa's alternative lending market reached $297 million in 2024 and is projected to hit $619 million by 2028.

Three things news to be analyzed:

  • The threat to Africa's SACCOs
  • Divided regulatory oversight
  • Significant tax revenue blind spot

The SACCO Challenge

Kenya's SACCO sector serves over 15 million members with a combined assets of more than Ksh 1.2 trillion as of September 2025 making Kenya's cooperative movement the strongest in Africa and seventh-best globally. Across East Africa, SACCOs are the foundation of financial inclusion. Uganda has over 1 million SACCO members across 896 credit unions, Rwanda's movement serves more than 5,000 societies supporting over 2 million people, Tanzania's SACCO network has stood the test of time as effective micro-financial institutions. Collectively, Africa has over 40 million SACCO members holding approximately $16 billion in total assets.

Digital lenders however are changing how Africans access credit. Kenya's FinAccess Survey 2024 revealed that 70.6% of SACCO members now prefer mobile channels for transactions. 

If 195 digital lenders compete for Kenya's 50 million people, that's one lender for every 256,000 people but competition is uneven because digital lenders hover around the same borrower profiles that SACCOs serve: salary earners, small business owners and people with small incomes.

The challenge becomes what Africa loses if SACCOs can't compete. When SACCOs lend money, the interest stays within the cooperative and returns to members as dividends. When digital lenders profit, that money goes to external investors mostly outside Africa. Kenya's cooperative penetration stands at 29.17% compared to Africa's average of 14.34%. If Kenya's model weakens, the entire regional movement loses its anchor.

The regulatory approaches across the continent show different theories. Kenya treats SACCOs as cooperatives with specialized financial functions, regulated under SASRA. Tanzania and Rwanda regulate SACCOs through their central banks. Uganda faces regulatory confusion, with jurisdiction shifting between the Ministry of Trade and the Ministry of Finance. Each approach shapes how well SACCOs can respond to digital competition. Instead of looking at it like inevitable displacement, stakeholders should explore strategic partnerships. What if SACCOs across East Africa collectively licensed digital lending technology while maintaining cooperative governance? What if the African Confederation of Cooperative Savings and Credit Associations (ACCOSCA) supported technology-sharing agreements that preserve member ownership while delivering mobile convenience?

The alternative, allowing pure market competition to play out, risks destroying financial infrastructure across Africa.

Lessons from Nigeria

Kenya's digital lending involves five agencies: CBK (licensing and lending practices), ODPC (data privacy), KRA (taxation), Communications Authority (technology platforms) and Competition Authority (market practices) which could ultimately create coordination challenges.

Nigeria. In July 2025, the Federal Competition and Consumer Protection Commission (FCCPC) introduced comprehensive Digital, Electronic, Online and Non-Traditional Consumer Lending Regulations developed through coordination between FCCPC, CBN, the Nigeria Data Protection Commission and the Independent Corrupt Practices Commission. Lenders face unified registration requirements, joint enforcement protocols and clear dispute resolution methods. When a lender violates multiple regulatory requirements simultaneously such as predatory interest rates, unauthorized data sharing and anticompetitive practices, Nigeria's coordinated framework enables joint action which Kenya's system lacks.

When digital lenders first came into Kenya, borrower harassment became big. After CBK introduced its regulatory framework, harassment cases dropped by 75% according to Data Commissioner Immaculate Kassait demonstrates what coordinated action can achieve. However, out of 668 complaints received by Kenya's Competition Authority up to June 2024, 197 came from the financial sector. Digital lenders ranked among the worst offenders. These complaints often involved violations across multiple domains simultaneously, yet each agency investigates separately.

Nigeria's experience shows the cost of coordination. Registration fees reach ₦1 million ($2,400) for digital lenders, with approval covering two apps. Additional apps cost ₦500,000 each. Fines range from ₦50 million to ₦100 million or 1% of annual turnover for companies breaching conduct rules. By bringing all non-bank lenders under consistent oversight, Nigeria leveled the competitive landscape between traditional banks and digital lenders.

Kenya needs similar coordination mechanisms: quarterly multi-agency forums where regulators share intelligence, joint investigation protocols for cases involving multiple jurisdictions, a unified consumer complaint portal and shared data analytics tracking key metrics across all licensed lenders. The financial cost is minimal.

Ghana's approach, launching in late 2025, may test whether newer markets can learn from both Kenya and Nigeria. With minimum capital requirements of GH¢2 million ($162,000) and license fees of GH¢20,000, Ghana is establishing its framework while observing what works elsewhere.

Tax Revenue

Digital lenders disbursed Ksh 109.8 billion in loans in Kenya as of November 2025. Nigeria's digital lending market is valued at $2.7 billion. South Africa's alternative lending market reached $297.2 million. Across the continent, billions flow through digital lending platforms but what happens with tax collection?

KRA collected Ksh 2.57 trillion in 2024/25 and targets Ksh 2.75 trillion for 2025/26. Digital taxation has become a priority, with KRA implementing a 20% excise duty on loan fees which is a provision extended to all financial institutions in the Tax Laws Amendment Act 2024. However, significant differences exist between how traditional banks and digital lenders are treated. Commercial banks benefit from IFRS 9 provisions on expected credit losses, allowing them to expense impaired loans through provisioning. Digital lenders remain 

bound by more conservative local tax laws. Only specific, fully written-off debts qualify for tax deductibility and only after all recovery efforts have been exhausted.

Philip Muema, a tax partner at Andersen Kenya, notes that this creates operational risks and market distortion. Banks enjoy more favorable frameworks while digital lenders face greater uncertainty and heavier compliance burdens. The Finance Act 2025 widened the definition of "digital lender" to cover all non-bank credit providers operating through electronic platforms excluding banks, SACCOs and licensed microfinance institutions. This brings more fintech and informal lenders into the excise net. Bringing them in and ensuring full compliance are different challenges.

Nigeria's regulations offer relevant insights. The FCCPC's 2025 regulations require digital lenders to maintain proper records and file annual returns by March 31st, including transaction volumes, values, complaints and audited statements. Biannual reports are mandatory and data must be retained for five years and made available within 48 hours of request. This level of reporting transparency enables effective tax administration.

There's also a revenue opportunity cost. With Ksh 109.8 billion in loans disbursed in Kenya alone, even modest interest rates generate billions in gross interest income. If the effective tax rate on this income is lower than it should be due to how lenders structure their operations, Kenya is leaving money on the table. This matters because Kenya faces a fiscal deficit of approximately Ksh 923.2 billion, about 4.8% of GDP. Across Africa, governments face similar fiscal pressures while digital lending generates substantial economic activity.

A comprehensive review of digital lender tax compliance would reveal whether current frameworks capture appropriate revenue. This review should examine actual tax payments compared to reported loan portfolios, how lenders structure their operations to manage tax exposure, whether cross-border flows are properly taxed and how data monetization is being reported and taxed.

Three Strategic Interventions

Based on Kenya's experience and lessons from Nigeria, Ghana and South Africa, Africa's digital lending sector needs three specific interventions:

A Pan-African SACCO-Digital Lender Partnership Framework: Instead of allowing competition to weaken cooperatives, create structured partnership models through ACCOSCA. This could include technology-sharing agreements where SACCOs license proven digital platforms, capital partnerships where digital lenders access SACCO capital at favorable rates and a regional credit bureau for digital micro-lending with cooperative governance.

Multi-Agency Coordination Mechanisms: Establish formal coordination between financial regulators, data protection authorities, revenue agencies and competition authorities. Nigeria's model provides a working template. Kenya should implement quarterly coordination forums, joint investigation protocols, shared data analytics platforms and a unified consumer complaint portal.

Harmonized Tax Compliance Frameworks: Conduct comprehensive examinations of tax collection from digital lenders across markets. Address equitable treatment of bad debt deductions, proper taxation of cross-border transactions, clear frameworks for taxing data monetization and regular audits ensuring growth in lending volume translates to appropriate growth in tax revenue.

Building Africa's Financial Future

The approval of 195 digital lenders in Kenya, 436 in Nigeria and new licensing across Africa marks a milestone in the financial sector development but the direction of that journey, whether it leads to genuine financial inclusion or simply creates new vulnerabilities, depends on choices made now.

Those choices involve:

  • Recognizing that SACCO competition is not just a market dynamic but a question about what kind of financial system Africa wants to build
  • Realizing regulatory fragmentation is not an administrative nuisance but a serious governance failure that requires continental learning
  • Realizing that tax collection from digital lenders is not a technical detail but a matter of fiscal justice and public revenue.

Kenya's experience with 195 lenders offers lessons for Ghana's emerging framework, insights for Nigeria's coordination challenges and context for South Africa's growing market. The growth in digital lending is neither inherently good nor bad. What matters is how Africa shapes this growth to serve the financial wellbeing of its people, strengthen rather than weaken the cooperative movement, and generate fair public revenue.