Kenya’s credit market is in crisis as the majority of citizens abandon loan applications, choking off access to capital for households and businesses.

A new survey by Credit Reference Bureau TransUnion reveals that 68 percent of Kenyan adults have shelved plans to borrow in 2025—a jump from 66 percent last year—citing crushing interest rates and fears of rejection.

Despite the Central Bank lowering the base lending rate from a 12-year high of 13 percent to 10 percent, commercial banks have refused to meaningfully pass on the relief. The average lending rate has dipped only marginally, from 16.6 percent to 15.65 percent, leaving borrowers trapped in one of the most expensive credit markets in Africa.

The consequences are dire:

• 42 percent of Kenyans cite prohibitive borrowing costs as the top reason for staying away from loans.

• 61 percent say their credit decisions are heavily influenced by interest rate hikes.

• A staggering 62 percent admit they will miss at least one bill or loan repayment in the next three months.

The retreat is already being felt by banks. Stanbic Bank’s loan book shrank by KSh 5.1 billion in just six months, while Equity lost KSh 8.6 billion and Absa’s lending plunged by KSh 11.4 billion. The sector is watching billions evaporate as borrowers opt out en masse.

What’s more alarming is the broader economic implication. With businesses starved of credit and households unable to access affordable financing, consumption and investment are grinding to a halt. This threatens to drag Kenya into a prolonged credit squeeze that could suffocate private sector growth and fuel joblessness.

Critics say the government has failed to protect citizens from predatory lending practices, leaving ordinary Kenyans to shoulder the burden of a broken system. While some are cutting back on essentials like travel and dining, many have no choice but to slide deeper into default.

The warning signs are clear: Kenya’s economy is hurtling toward a debt-driven stagnation, with families and enterprises retreating from the credit market. Unless decisive reforms are enacted to lower the cost of borrowing and enforce accountability in the banking sector, the financial future of millions of Kenyans remains in peril.