Intensifying Digital Credit Competition

The Co-operative Bank of Kenya on Wednesday, 29 October 2025, launched a new digital overdraft facility named 'Kamilisha', escalating the battle for dominance in Kenya's rapidly growing digital lending space. The service allows customers to overdraw their accounts by up to KSh 100,000 to complete transactions, placing it in direct competition with Safaricom's market-leading Fuliza and Equity Bank's Boostika service.

In a statement, the lender confirmed the service is designed for both individuals and businesses, enabling them to complete payments for essentials like rent, utilities, and stock purchases when their account balances are insufficient. "The overdraft service allows you to complete transactions when you don't have enough money in your bank account. It bridges the shortfall between what you have and what you need to pay," the bank announced.

Kamilisha's Cost Structure and Terms

According to the bank's official terms, the Kamilisha facility is structured as a short-term loan with a maximum repayment period of 30 days from the first use. Funds are automatically recovered from any subsequent deposits made into the customer's account. Eligibility and overdraft limits are determined by the bank based on a customer's account activity, including salary deposits and business turnover.

The pricing model for Kamilisha appears positioned to undercut its main rivals. For a KSh 1,000 overdraft held for a month, the total cost is approximately KSh 84.34. This is composed of a 2% one-off access fee (KSh 20), a 20% excise duty on the access fee (KSh 4), a credit life insurance premium of 0.034% (KSh 0.34), and a daily maintenance fee of 0.2% on the outstanding balance (amounting to KSh 60 over 30 days). This makes it marginally cheaper than Equity's Boostika, which costs KSh 85 for the same amount and duration, and significantly more affordable than Safaricom's Fuliza, which would cost KSh 180 over the same period.

The Kenyan Digital Overdraft Market

Co-operative Bank's entry into the overdraft market targets a sector dominated by Safaricom's Fuliza, a product jointly operated with KCB Bank and NCBA Bank that serves over eight million active users and disburses billions of shillings monthly. Fuliza, launched in 2019, allows M-PESA users to complete transactions with insufficient funds up to a limit of KSh 70,000. Equity Bank launched its Boostika product in early 2024, also offering a limit of up to KSh 100,000 to its customers.

The launch comes amid increased regulatory oversight by the Central Bank of Kenya (CBK) aimed at professionalizing the sector and protecting consumers from predatory practices. As of September 2025, the CBK had licensed 153 Digital Credit Providers (DCPs) in an effort to formalize an industry that has faced criticism for high-interest rates and aggressive debt collection tactics. By June 2025, these licensed lenders had disbursed 5.5 million loans valued at KSh 76.8 billion, highlighting the significant demand for accessible, short-term credit among Kenyans. The CBK is further tightening regulations, with draft rules introduced in August 2025 for all Non-Deposit Taking Credit Providers (NDTCPs) to enhance transparency and consumer protection.

Implications for Kenyan Consumers

For Kenyan consumers and small business owners, the introduction of Kamilisha signifies increased choice and the potential for more competitive pricing in the digital credit market. The facility's slightly lower cost compared to its competitors could pressure other players to review their fee structures, ultimately benefiting the borrower. The service provides a crucial financial buffer, enabling users to manage cash flow gaps and meet urgent payment obligations without resorting to unregulated lenders.

However, the proliferation of digital credit products also raises concerns about rising household debt. Financial analysts urge consumers to use such facilities responsibly, remaining mindful of the associated costs and the 30-day repayment window to avoid falling into a debt cycle. The automatic recovery of funds from incoming deposits is a feature designed to ensure timely repayment but requires users to manage their finances carefully. The expansion of Co-op Bank's digital loan portfolio, which already includes products like the Flexi Plus Salary Advance, signals a strategic shift by traditional banks to capture a larger share of the lucrative fintech market.