The Kenyan economy is running on empty fumes and mobile data. A shocking new report reveals that millions of citizens are now surviving entirely on digital loans, trapping an entire generation in a vicious cycle of predatory debt.

With the cost of living soaring and formal jobs drying up, the smartphone has become the new bank manager—and a ruthless one at that. Digital lending now accounts for a staggering 54% of all borrowing in the country, with 87% of these loans taken by small business owners (SMEs) just to keep their doors open. But this lifeline comes with a chokehold: interest rates that can hit an astronomical 280% APR.

"Fuliza" Living

"I borrow from Peter to pay Paul," says John Kamau, a boda boda rider in Nairobi. "I take a Tala loan to pay my Zenka loan, then I Fuliza to eat." Kamau is not alone. He represents the millions of Kenyans who are technically insolvent, living on the margins of an unregulated financial wild west.

The crisis has birthed a new breed of "Shylocks"—informal lenders who demand car logbooks and title deeds for small cash advancements. When the borrower inevitably defaults, assets worth millions are auctioned for peanuts. It is a transfer of wealth from the poor to the predatory rich, happening in broad daylight.

• The Regulation Gap: Despite the CBK’s attempts to rein in digital lenders, the market is evolving faster than the law. New apps pop up daily, targeting the desperate with "instant cash" promises that hide punitive fees.
• The Social Cost: The stress of debt is fueling a mental health crisis. Families are breaking up over auctioned household goods, and the shame of being "listed at CRB" has become a national stigma.

A Ticking Bomb

Economists warn this bubble is unsustainable. If 54% of the country is borrowing just to buy food and airtime, we are not building an economy; we are digging a hole. As 2026 unfolds, the government must decide: will it protect the hustlers it promised to uplift, or watch them be swallowed by the sharks in their pockets?