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How is finance supporting Kenyan businesses? Results from the 2023 FinAccess MSE Tracker Survey

September 5th, 2023

The Micro and Small Enterprises (MSEs) Tracker Survey is conducted by the Central Bank of Kenya in collaboration with the Kenya National Bureau of Statistics (KNBS) and Financial Sector Deepening Trust (FSD) Kenya. The MSEs Tracker Surveys use a sample from the FinAccess Surveys with target households being those who derive income from small businesses. The target respondents are those who indicated that they owned a business or were self-employed, provided mobile phone number and consented to being interviewed again in follow-up surveys.

This report presents topline findings from the second phase (Wave II) of the MSEs Tracker Survey that was conducted in June 2023. The first phase of MSE Tracker Survey (Wave I) was conducted in October 2022 and report of the topline findings released in March 2023.

Key takeaways from the 2023 report

Operational Trends: From the original sample of MSEs operational in 2021, 73% remained operational in June 2023. However, trends across demographics imply some strain among more vulnerable groups such as women and rural businesses. Between October 2022 and June 2023, the percentage of women-owned businesses in operation declined from 74% to 70%, and rural businesses in operation declined from 72% to 69%. Those who had closed cited lack of working capital (46%) and reduced customer demand (24%) as key drivers, with 59% of closed businesses saying they tried to source capital before closing (up from 40% in October 2022).

Digital Payments: While cash remained dominant (99% of businesses operate partly or wholly in cash), the use of digital channels for business transactions surged from 74% of businesses accepting digital payments from customers in October 2022 to 86% in June 2023. This was mainly driven by female-owned, urban, and micro (owner-operated) businesses. Between October 2022 and June 2023, the percentage of MSEs who reported that customers used mobile money remittances (‘send money’) to pay for goods and services, also rose from 68% to 76%. Reported use of mobile money till numbers also grew. 

Credit: The government’s Hustler Fund has rapidly risen to being the main source of credit for MSEs, with 45% of MSEs currently having a Hustler Fund Loan. Ease of access is the main driver of uptake, with 39% of Hustler Fund borrowers citing that this was what they liked most about the fund. Despite the fact that the Fund offers credit at relatively low interest rates compared with commercial providers, only 11% of Hustler Fund borrowers cited low interest rates as their preferred feature of the Fund. Whilst MSEs say they use loans primarily to finance stock/supplies, Hustler Fund loans are primarily used for personal and household purposes.

Since October last year, the rate of defaults has also risen. In June 2023, 61% of MSE borrowers said they had recently defaulted on their loans or paid late, up from 43% in October last year. 49% of Hustler Fund borrowers said that they had defaulted or paid late.

Meanwhile, mobile banking/mobile money loans (including MShwari, KCB MPesa, Fuliza) remain the second most prevalent source of credit for MSEs, although the percentage of MSEs with outstanding mobile loans has declined significantly from 57% in October 2022 to 44% in June 2023. In contrast, the percentage of MSEs with a traditional bank/MFI loan doubled between October 2022 and June 2023, from 6% to 16%. It is possible that access to traditional bank/MFI credit is being unlocked through by improved information flows generated by use of digital payments into bank tills. Further research is needed to investigate the drivers behind Kenya’s changing credit markets.


Business Optimism: Optimism regarding business prospects declined, with only 51% expecting better performance in the next twelve months as opposed to 58% in October 2022.

For detailed insights, refer to the full report: FinAccess 2021 Wave II Tracker (June 2023)

You can also access the Wave I report (October 2022) here 




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