Mobile loan effective APR Kenya 2026: compute it yourself

Why Kenyan lenders do not quote APR

The main reason is that they are not required to. There is no equivalent in Kenyan law to the US Truth in Lending Act mandate to display APR at every point of sale. The CBK Digital Credit Providers Regulations, 2022 require transparent disclosure of fees, but not conversion to a standardised annualised rate.

Secondary reason: a headline flat fee of 7.5 percent sounds much smaller than an annualised 90-plus percent, even though they describe the same loan.

The simple effective APR formula

For a single loan you take once and repay on the due date without rollover:

Effective APR (simple) = (fee amount / disbursed amount) x (365 / tenure days) x 100

Example, KES 5,000 loan, 7.5 percent facility fee, 30-day tenure:

Fee: KES 375
Ratio: 375 / 5,000 = 0.075
Annualise: 0.075 x (365 / 30) = 0.9125
APR: 91.25 percent

Compounded APR

If you roll the loan over each period at the same fee, the compounded effective APR is materially higher. The formula:

Compounded APR = (1 + fee percent) ^ (365 / tenure) - 1

For the same loan: (1.075) ^ (365/30) - 1 = about 138 percent. That is the interest you would pay if you rolled the loan over every 30 days for a year at the same headline fee.

The tenure trap: same fee, wildly different APR

A 5 percent facility fee looks the same on paper. Its APR depends entirely on the tenure:

5 percent over 30 days: simple APR ~ 61 percent.
5 percent over 14 days: simple APR ~ 130 percent.
5 percent over 7 days: simple APR ~ 261 percent.
5 percent over 3 days: simple APR ~ 608 percent.

This is why the very-short-tenure app lenders can look competitive on headline fee while being catastrophically expensive on effective rate.

All-in cost: fee + excise + penalty

The formula above uses lender fee. To compute your true APR, use total repayable minus disbursed:

All-in APR = ((total repayable - disbursed) / disbursed) x (365 / tenure) x 100

This captures excise, insurance, and any hidden processing. See what a mobile loan actually costs for the fee stack breakdown.

A benchmark table for Kenyan lenders

Illustrative benchmarks (mark as unverified where you have not seen the current in-app screen):

Hustler Fund at 8 percent per annum: 8 percent APR (subsidised).
M-Shwari at 7.5 percent per 30 days: ~91 percent simple APR (verified from the published headline; total including excise higher).
KCB M-PESA at published tiered fees: roughly 12 to 108 percent simple APR depending on tier (verify on M-PESA screen at drawdown).
Fuliza at published daily fees: highly dependent on how long the balance sits; often 100 to 300 percent APR for balances that persist beyond a few days (verify on Safaricom Fuliza page).
Tala, Branch, Zenka on 21 to 30 day tenures with facility fees in the 5 to 15 percent range: 60 to 260 percent simple APR (verify each in-app).

Full ranked table at effective APR across Kenya loan apps.

Sources

Central Bank of Kenya. Digital Credit Providers Regulations, 2022. Disclosure requirements.
Excise Duty Act, 2015 and Finance Act updates.
Illustrative APR calculations by paybillke; specific lender rate figures should be verified in-app.

FAQ

Why do Kenyan lenders not quote APR?

There is no legal requirement in Kenya to publish an APR on short-term unsecured loans. Lenders quote flat facility fees because they look smaller. A 7.5 percent fee for 30 days sounds cheaper than the equivalent 90-plus percent annualised rate.

How do I convert a flat fee to APR?

Divide the fee percent by the tenure in days, multiply by 365. A 7.5 percent fee over 30 days is (7.5 / 30) x 365 = about 91 percent effective annualised (simple). Compounded is higher.

What is a fair APR on a mobile loan?

There is no legal cap. In practice, subsidised products (Hustler Fund) are single-digit APR, bank-backed products (M-Shwari, KCB M-PESA, Timiza) sit in the 60 to 120 percent APR band, and app-based lenders often exceed 200 percent APR when annualised from short-tenure fees.