An increase in smartphone prices in Kenya has pushed many users to tap loans, fuelling a device financing boom as handsets slip out of reach amid shrinking disposable incomes and rising economic pressures.
Kenya has witnessed one of the steepest jumps in smartphone prices on the continent, driven by a mix of local and international economic factors that have left many unable to afford even entry-level devices.
Between 2019 and 2025, average smartphone prices more than tripled from Sh5,955 to Sh18,979, according to global phone market analysis firm Canalys, meaning fewer Kenyans can now buy phones in cash.
The share of devices selling below Sh13,000 ($100) has fallen to 32 percent from over 50 percent in 2019, while phones in the Sh13,000–Sh26,000 ($100–$199) range now make up more than half of shipments. High-end devices costing over Sh100,000 ($800) have also surged, as more buyers seek better cameras, storage, and memory.
This widening affordability gap has created fertile ground for financiers. Several device financing firms have emerged and reported rapid traction, riding on the growth of smartphone penetration in Kenya.
Players include M-Kopa, Watu Simu, Safaricom’s Lipa Pole Pole, Datacultr, and even banks, which use buy now pay later (BNPL), micro-financing, or pay-as-you-go (PayGo) models to help consumers own smartphones while paying in instalments.
Equity, KCB, and Absa are among banks that have entered the space, partnering with vendors, brands, and telcos to finance device purchases.
While no industry-wide data shows what share of smartphones are now bought through financing, surveys indicate the uptake is growing fast.
The Financial Access Survey of 2024 by the Central Bank of Kenya, Financial Sector Deepening Kenya, and the Kenya National Bureau of Statistics found that hire purchase or lipa mdogo mdogo accounts tripled from 579,242 in 2021 to over 1.7 million in 2024.
Watu Simu, which diversified from motorcycle financing in 2022, hit one million device-financing customers by October 2024, just under two years after launch. M-Kopa, which set up a local assembly plant in January 2023, also reported one million pay-go smartphone sales by September, underscoring the segment’s growth.
Experts attribute the boom to soaring phone prices, but also to other factors eroding affordability amid rising demand for smartphones.
“Several factors have contributed to the cost of phones going up in Kenya, and now to drive sales, vendors have been left with no option but to collaborate with various device financing firms to make sure that consumers can access these smartphones,” said Manish Pravinkumar, principal analyst for Middle East and Africa at Canalys.
According to him, three main factors have driven up prices since 2019 – the depreciation of the Kenyan shilling, the introduction of a 50 percent import duty on smartphones in 2022, and rising global manufacturing costs.
“The Kenyan market is moving much faster towards financing-led upgrades, with people seeking to graduate from feature phones or buy a better smartphone now using it to get their next device,” he added.
Device financing allows users to pay as little as Sh30 or Sh50 per day, but the catch is that they often end up paying nearly twice or even thrice the original price because they couldn’t pay upfront. Many are also often locked out of their phones when they can’t pay, and sometimes they end up with a negative credit score if they lose the phones and fail to complete the payments.
The financing boom has also spawned secondary beneficiaries: firms like Knox and Trustonic that provide device-locking software, mobile money providers powering the payment gateways, and vendors linking financiers to buyers.
With the surge, Kenya is increasingly seen as a case study for device financing in Africa, though the trend also reflects underlying economic hardship that makes what has become a basic necessity almost unaffordable.
While smartphones now account for 80 percent of all mobile devices in Kenya, the quarter to March saw an unusual rise in feature phone sales, with more than two million units added in just three months – a sign of consumers being priced out.
Mr Pravinkumar notes that, besides affordability challenges, Kenya’s financing market is buoyed by growing tech-savviness and the rising importance of digital technologies in business.
“While other regions are trying to replicate this, it’s moving, but at a much slower pace because of restrictions such as infrastructure, technological advancement, and digitisation efforts by governments,” he said.
Those dependent on the BNPL, however, face a bumpy run on changes through the Finance Act 2025. In a drastic shift, the Finance Act 2025 amended the definition of a ‘digital lender’ to include any person who provides credit or lending services as an incidental supply to their core business rather than a main supply.
The new law requires anyone involved in any form of credit to charge excise duty on their lending services. However, the Act now amends the definition of digital lenders to exclude financial institutions including banks, microfinance institutions, and saccos. This is because fees, charges, and commissions charged by financial institutions are already subject to excise duty.
