Lenders are seeing a growing demand for salary advances and other payslip-backed short-term digital loans as workers increasingly turn to credit to bridge cash-flow gaps between paydays.
The trend is providing banks and digital lenders with a growing market as salaried customers seek quick access to funds for emergencies, bills, school fees and other financial obligations.
Fresh disclosures show that Co-operative Bank of Kenya disbursed Sh41billion on its short-term mobile credit platform, e-flexi, between January and July 2026, up from Sh35.75 billion in a similar period of 2025. Salary advances from the Co-operative Bank of Kenya form a major share of its digital lending.
The growth represents a 14.7 percent increase and points to the rising appetite for short-term credit among salaried workers.
Banks, including KCB, Equity and NCBA, also offer salary-linked credit products, although they do not publicly disclose disbursement figures for the products.
Disclosures by digital lenders such as Centum Investment’s subsidiary called Jafari Credit, and Little Pesa, founded by former banker Rakesh Kashyap, also point to a growing market for short-term salary-backed credit for consumption.
Co-op Bank says it offers salary advances ranging from Sh10,000 to Sh1 million and repayment periods of up to one year for customers who have operated salary accounts for at least three months.
The lender says demand for salary advances typically peaks between the 20th day of the month and the fifth day of the following month, coinciding with salary processing periods. It added that borrowing also tends to rise during back-to-school periods and the festive season.
“The product's popularity is driven by its ability to help customers meet short-term financial obligations, address emergencies, and complete transactions when account balances are insufficient. Customers also benefit from a seamless digital experience, with loan limits, borrowing, and repayments all digitized,” said Co-op Bank.
The trend is also being seen among non-bank lenders targeting salaried customers. More digital lenders are also targeting salaried workers, attracted by the predictability of their income and the ability to use digital platforms to assess and disburse loans quickly.
Little Pesa, founded by former M-Oriental Bank Kenya CEO Rakesh Kashyap, focuses exclusively on short-term unsecured loans to salaried customers.
Mr Kashyap said the lender had seen increased demand for larger loans of up to Sh500,000, with borrowers preferring longer and more flexible repayment periods.
The shift towards larger loans and longer repayment periods points to changing borrowing patterns among salaried workers, with customers seeking more time to spread repayments as their financial obligations increase.
“They are finding it difficult to take smaller loans and repay within a month. We are seeing more demand for relatively higher loans of up to Sh500,000 which come with flexible repayment periods of up to a year. We expect the appetite for loans with flexible repayment periods to continue rising,” said Mr Kashyap.
Jafari Credit increased lending to civil servants by 10.1 percent to Sh413 million in the year ended March 2026 from Sh375 million a year earlier. Cumulative lending since its launch in 2022 has reached Sh1.4 billion.
The lender has focused on civil servants, including teachers, police officers and doctors, whose predictable incomes provide a basis for salary-backed lending.
Jafari Credit chief executive Edwin Munyiri said the lender was seeing continued demand for affordable and accessible credit among salaried workers.
“Maintaining an NPL rate of five percent while growing our loan book shows that it is possible to scale sustainably without compromising credit quality,” said Edwin Munyiri, CEO at Jafari.
Jafari is targeting further growth in the segment, with plans to deploy up to Sh800 million in civil servant loans in the year to March 2027.
Co-op says its E-Flexi product averages Sh6 billion in disbursements every month and has so far lent out Sh450 billion since launch in 2017. It expects monthly salary cycles, education-related expenses and seasonal spending to remain key drivers of demand.
Lenders use transaction histories, income patterns and digital credit scoring to determine borrowing limits and assess repayment capacity.
The strong uptake for salary advances comes as households face competing financial demands, with workers increasingly looking for flexible ways to manage expenses before the next salary.
Co-op and Jafari say they have stepped up the use of artificial intelligence in credit appraisal and customer engagement, helping them expand lending while maintaining credit quality.
“A key differentiator is our robust AI-powered credit scoring engine, which uses customer transaction history and income patterns to allocate borrowing limits, enabling customers to access credit quickly without paperwork,” said Co-op Bank.
