Mwananchi Credit, a Kenyan non-bank financial institution, has initiated a strategic restructuring of its check-off loan department, requiring employees to reapply for positions amid mounting financial pressures.
The lender has denied reports that it is laying off employees in its check-off loan unit, instead framing the move as a strategic restructuring to bolster operational efficiency amid Kenya’s deteriorating credit environment.
The move follows persistent underperformance in the product line, which primarily serves government workers, and reflects broader challenges in Kenya’s credit sector as non-performing loans (NPLs) surge.
In an internal memo signed by Human Resource Manager Collins Okello, the company framed the restructuring as a bid to “bolster operational efficiency” after “concerted efforts to improve collections and strengthen financial accountability” failed to yield results. The check-off loan product, used by teachers, police officers, and civil servants, has faced headwinds due to rising defaults and lagging collections, with team leaders missing targets and contributing to “significant financial losses,” Okello stated.
Interviews for retained roles begin Tuesday, part of a process initiated after high-level discussions on February 25, 2025 addressed NPLs, commission structures, and underperformance. The restructuring underscores the strain on Kenya’s alternative lending sector, where firms like Mwananchi Credit have long filled gaps left by traditional banks but now face tighter macroeconomic conditions.
Kenya’s financial sector is grappling with an NPL crisis, with ratios exceeding 15 per cent in late 2024, triple the Central Bank of Kenya’s (CBK’s) 5% benchmark. Rising interest rates and a weakening shilling have squeezed household budgets, forcing lenders to reassess risk exposure. Mwananchi’s check-off loans, which rely on salary deductions, have been particularly vulnerable as borrowers struggle with debt servicing.
The company’s shift mirrors a wider industry reckoning. Traditional banks have tightened credit issuance, while mobile lenders and microfinance institutions face scrutiny over predatory practices. Mwananchi’ s restructuring signals a move toward stricter risk management, balancing profitability with its reputation as a flexible financier.
Okello emphasized the company’s recognition of employees’ contributions and pledged support during the transition. However, the restructuring highlights a strategic recalibration to mitigate risks in Kenya’s high-default environment. Mwananchi has historically offered logbook loans, title deed financing, and emergency loans with flexible repayment terms, but the check-off loan’s struggles suggest a need to refine product viability.
The overhaul could foreshadow a sector-wide trend as lenders adapt to Kenya’s turbulent credit landscape. Non-bank institutions, which expanded rapidly by targeting underserved borrowers, now face pressure to align lending models with economic realities. Mwananchi’s outcome will test whether alternative lenders can sustain their role without compromising financial stability.
