The Rise of Device Financing in Kenya: What It Means for Financial Inclusion

A decade ago, a Kenyan smallholder farmer in Kisii County had two realistic paths to owning a smartphone: save for 6–12 months, or go without. Neither was appealing, and the majority went without. Today, that same farmer can walk into a M-Kopa agent's shop, leave a KES 500 deposit, and go home with a smartphone that afternoon — repaying in daily instalments of KES 40–60 from their M-Pesa. The device financing revolution in Kenya has happened faster than almost anyone predicted, and its effects on financial inclusion are both profound and complicated.

The Smartphone Ownership Gap

Kenya has one of Africa's most advanced mobile money ecosystems, but smartphone ownership still lags behind the potential. As of 2024, Kenya's internet penetration rate sits at approximately 42% of the population, with the majority of connections via mobile. However, a significant portion of those connections are through feature phones that access only basic internet services.

The gap between feature-phone users and smartphone users matters enormously for financial inclusion because the capabilities are not equivalent:

• A feature phone can send M-Pesa — but cannot access Fuliza without the app.
• A feature phone cannot run loan apps, banking apps, or the full M-Pesa interface.
• A feature phone cannot use Safaricom's Zuri chatbot, NHIF online services, or eCitizen.
• A feature phone cannot participate in the gig economy (Bolt, Uber, Lynk, or Ajira freelancing).

The smartphone is not just a convenience upgrade. For millions of Kenyans, it is the difference between participating in the digital economy and being excluded from it entirely.

How Device Financing Is Closing the Gap

Several models of device financing have emerged to address the affordability barrier, each with distinct approaches:

Pay-As-You-Go Solar and Devices (M-Kopa Model)

M-Kopa's model — often cited as one of the most successful financial inclusion interventions in Africa — bundles device financing with energy access. A customer acquires a solar home system and increasingly a smartphone in the same transaction, with daily M-Pesa payments calibrated to informal-sector income levels. M-Kopa has now reached over 3 million customers across Kenya, Uganda, and Nigeria, and its data shows that smartphone ownership via the platform correlates strongly with increased M-Pesa transaction activity, SACCO participation, and subsequent credit access.

Retail BNPL (Lipa Later, Aspira)

These operators serve the slightly more affluent urban customer who wants a specific phone model from a retail store. By partnering with Jumia, Safaricom shops, and independent electronics retailers, they bring BNPL financing to shoppers who can prove some income history but cannot absorb the full upfront cost.

Operator Device Finance (Lipa Mdogo Mdogo)

Safaricom's programme reaches customers through its own distribution network, making it particularly powerful in areas where formal retail is thin. Because Safaricom already knows the customer's M-Pesa usage patterns, credit assessment is fast and borrowers without CRB history can still qualify.

The Proven Financial Inclusion Benefits

The data supporting device financing as a financial inclusion tool is growing:

Mobile Banking Adoption

Research by GSMA and the Financial Sector Deepening (FSD) Kenya trust consistently shows that smartphone ownership is one of the strongest predictors of formal financial service uptake. After acquiring a smartphone through BNPL or device financing, new users rapidly expand their financial activity — registering for savings apps, applying for credit, and diversifying income streams.

Income Diversification

With a smartphone, a Kenyan market trader can open an M-Pesa business account, list products on Facebook Marketplace or Jiji.co.ke, receive mobile payments, and track inventory. A rural farmer gains access to M-Farm for market price data, Safaricom Digifarm for agri-credit, and USSD weather alerts. These are not marginal improvements — they translate to measurable income increases.

Formal Credit History Building

Completing device financing repayments builds a credit footprint. M-Kopa, Lipa Later, and Aspira all report positive repayment data to Credit Reference Bureaus, helping customers build the CRB history that unlocks bank loans, higher mobile credit limits, and formal financial services.

The Solar Component

For M-Kopa and similar companies, device financing often comes bundled with solar home systems — replacing kerosene lamps with reliable electric lighting. The financial impact is tangible: a household spending KES 200–400 per month on kerosene saves that amount immediately on switching to solar, often funding their instalment repayment directly from savings.

The Risks: Over-Indebtedness in a New Form

The same features that make device financing powerful for financial inclusion also create new risks — particularly for low-income households with little financial cushion.

Stacking of Commitments

As device financing options have multiplied, some households have accumulated multiple simultaneous obligations: a solar system from M-Kopa, a phone from Lipa Later, a TV from Aspira, and a mobile loan from a DCP app. Each product has its own daily or monthly deduction, and the combined burden can exceed what irregular income can sustain.

The "Productive Asset" Illusion

While smartphones often genuinely are productive assets, not every device financed is used productively. A television financed for a rural household brings entertainment value but not income. When the financing cost is 50–80% per year in effective terms, the consumption value needs to be very high to justify the cost — and for many households it is not.

Lock-in and Loss of Access

The remote-lock technology that makes device financing viable creates a specific vulnerability: when income drops unexpectedly — illness, a family emergency, a bad harvest — the device can be locked precisely when the borrower most needs it for communication and mobile money access. The device that was supposed to enable financial resilience becomes unavailable during a financial crisis.

Limited Understanding of True Cost

Financial literacy studies in Kenya consistently show that most consumers who use BNPL or device financing cannot accurately state the effective interest rate they are paying. This is not a character failing — it reflects how these products are designed and marketed. The daily KES 50 framing is psychologically very different from "you will pay 60% per year in financing charges."

The Regulatory Picture

The Central Bank of Kenya's Digital Credit Provider licensing regime, which came into full effect in 2022, covers many mobile lenders but its application to BNPL and device financing operators is still evolving. M-Kopa operates a licensed entity. Lipa Later and Aspira have sought licensing. The broader question of whether all device financing should be subject to the same transparency requirements as cash loans is a live regulatory debate.

The Kenya Financial Sector Deepening Trust and academic researchers have consistently advocated for clear Total Cost of Credit disclosure in BNPL products — requiring providers to show the total amount to be repaid alongside the daily instalment amount. This would give borrowers the information they need to make genuinely informed decisions.

A Cautious Positive Outlook

Device financing in Kenya is, on balance, a positive development for financial inclusion. The millions of households that now have smartphones, solar power, and building credit histories through device finance programmes are meaningfully better off than they would have been without access to these products. The alternative for most was not "save up and buy outright" — it was simply going without.

The risks are real but manageable with better consumer awareness, stronger disclosure requirements, and responsible product design. The ideal regulatory and market outcome is a device financing ecosystem where:

1. Total cost of credit is always clearly disclosed before signing.
2. Repayment amounts are genuinely calibrated to realistic income levels.
3. Hardship provisions exist to pause rather than lock during genuine income shocks.
4. Positive repayment data is consistently shared with CRBs to build borrower credit histories.

Kenya is moving in this direction, albeit slowly. In the meantime, informed borrowers who understand what they are signing up for can benefit enormously from the access that device financing provides.

Once you have your smartphone and are looking for flexible short-term credit for life's everyday needs, SwiftCash is designed for exactly that purpose — fast, transparent loans up to KES 40,000 to your M-Pesa, with no hidden charges and no device lock-in. It is the kind of credit that works best alongside, not instead of, the financial access that a smartphone enables.