Rising Handset Prices Drive Kenyans to BNPL, Microloans, and Daily Payment Schemes
As smartphone prices continue to climb, millions of Kenyans are finding themselves turning to daily payment plans just to stay connected
Smartphones have become a necessity in Kenya, but owning one has rarely been harder. Prices have climbed so steeply in recent years that many buyers now rely on financing schemes to get their hands on even the most basic models. Device financing in Kenya, which was once an occasional stopgap, is fast turning into the primary way people buy phones, with many relying on these plans.
Industry data shows just how deep the price squeeze has become. Canalys reports that the average smartphone in Kenya cost Sh5,955 in 2019. By 2025, that figure had ballooned to Sh18,979, more than tripling in just six years. Budget devices under Sh13,000, once the backbone of the market, now make up less than a third of shipments. Meanwhile, mid-range phones have taken over, and premium models—some priced above Sh100,000—are carving out a loyal audience of status-conscious buyers seeking device financing in Kenya.
Why Phones Cost More
Analysts point to three key drivers. First, the Kenyan shilling has lost ground against the dollar, inflating import costs. Second, the government imposed a 50 percent import duty on smartphones in 2022, a policy meant to encourage local assembly but which raised prices overnight. Third, global manufacturing costs have risen, making handsets more expensive everywhere, not just in Nairobi’s electronics stalls. Device financing in Kenya has adapted to these changes, making it an essential option.
“The combination has left vendors little choice but to team up with financiers,” said Manish Pravinkumar, principal analyst at Canalys. “Without these partnerships, the market would stall.”
Device Financing as the New Normal
That partnership model is now visible across the country. M-Kopa, Watu Simu, Safaricom’s Lipa Mdogo Mdogo, and Datacultr are among the best-known players, offering daily or weekly payment plans. Banks such as Equity, KCB, and Absa have also moved in, teaming up with brands and telcos to offer credit-backed device purchases.
The numbers are telling. A joint Financial Access Survey (2024) by the Central Bank of Kenya, FSD Kenya, and KNBS found that hire-purchase accounts tripled in just three years, rising from 579,000 in 2021 to over 1.7 million by 2024. Watu Simu, which only began financing smartphones in 2022, hit one million customers within two years. This surge in device financing in Kenya highlights its growing importance in the market, with M-Kopa matching that figure in 2023, buoyed by its Nairobi assembly line.
The Hidden Price of Convenience
For many Kenyans, these plans open the door to a device that would otherwise be unaffordable. Customers can pay as little as Sh30 or Sh50 a day. But the trade-off is steep: by the end of the contract, most buyers will have paid two or three times the sticker price. Missed payments can also trigger phone lockouts, while defaults risk damaging credit histories.
This ecosystem has produced winners beyond the financiers. Firms such as Knox and Trustonic supply the software that can lock a handset remotely. Mobile money platforms process the micro-payments, and retailers act as intermediaries between lenders and customers. In short, an entire value chain has sprung up around the financing boom in Kenya.
Regulation Catches Up
The growth has not gone unnoticed by policymakers. The Finance Act 2025 expanded the definition of a digital lender to cover businesses that provide credit as part of their operations, meaning device financiers must now charge excise duty on lending fees. Traditional banks remain exempt, but smaller fintech players face a higher compliance burden.
Even with tighter rules, the trend is unlikely to slow. Smartphone penetration in Kenya is now above 80 percent, but the resurgence of feature phones—two million units sold in the first quarter of 2025—shows how many buyers remain priced out of the market.
A Necessary Lifeline
Kenya’s device financing boom reflects both innovation and hardship. On one hand, it shows how fintech and telecoms are collaborating to solve a pressing affordability gap. On the other, it underlines the reality that a tool now central to work, school, and commerce has become too costly for many to pay for upfront.
For millions, financing isn’t a choice—it’s the only way to stay connected in a digital economy where being offline carries an even higher cost.
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