- Banks advanced Ksh424.67 billion to MSMEs in the first nine months of 2026, recording a 30 per cent increase.
- Falling lending rates and improved loan repayments are supporting increased access to business credit.
- The banking sector is edging closer to its Ksh500 billion annual lending target as calls grow for more inclusive financing.
Kenyan banks lent Ksh 424.67 billion to micro, small and medium enterprises (MSMEs) between January and September 2026, a 30 per cent rise.
That compares with Ksh 326.5 billion advanced in 2025, according to the Kenya Bankers Association (KBA). At the current pace, the industry is edging closer to its Ksh 500 billion target for new MSME loans this year and could record its highest annual lending to small businesses.
Equity Bank led the pack as at September 2026 with Ksh 127.95 billion in MSME financing. Co-operative Bank of Kenya followed with Ksh 60.26 billion, while Kenya Commercial Bank (KCB) came third at Ksh 41.10 billion.
Family Bank ranked fourth with Ksh 31.84 billion, and NCBA Bank came fifth at Ksh 28.69 billion. Stanbic Bank posted Ksh 25.93 billion, Absa Bank Ksh 21.20 billion and I&M Bank Ksh 20.39 billion. Kingdom Bank closed out the top ten with Ksh 15.90 billion, just ahead of Diamond Trust Bank (DTB) at Ksh 14.34 billion. Together, the ten lenders account for about Ksh 387.6 billion of the total.
Cheaper credit has helped. Average commercial bank lending rates fell to 14.4 per cent in September 2026, down from 17.2 per cent in November 2024. Meanwhile, lending to the private sector grew by 10.6 per cent in September, up from 10.3 per cent in August.
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Repayment is also improving. The gross non-performing loan (NPL) ratio, which shows the share of loans not being paid on time, dropped to 13.9 per cent in September 2026. It stood at 14.8 per cent in June and 17.6 per cent in August 2025.
Even so, the numbers point to unfinished work. Banks now need to reach more businesses, especially first-time borrowers and enterprises that have struggled to access credit in the past.
In addition, small firms need more long term financing. Such funding would allow them to buy equipment, expand operations, invest in productive activities and create jobs.
Ultimately, progress will not rest on the amount banks lend alone. It will also depend on how many businesses secure financing and how well they use it to grow, hire workers and contribute to the wider economy.
By Benedict Aoya
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