Formerly Employed Kenyans Debt Doubles to More Than 900 Billion Shillings

The total debt for formerly employed Kenyans has more than doubled since the year 2010 according to a survey conducted by HTM Capital.

According to the survey, the total debt for formerly employed Kenyans has risen from 413 billion shillings in 2010 to 907 billion shillings in 2016 and that the estimate might be higher as the year comes to an end.

The survey estimates that the average household debt for a Kenyan family that has a monthly income of 100,000 shillings has increased from 409,698 shillings to 731,979 shillings. The survey says that the increase in debt has been largely driven by the increase in the accessibility of funds via mobile banking services.

Majority of Kenyans now are taking loans via mobile phones. This has been driven by Kenyan commercial banks shifting from traditional banking (where people used to physically visit the banking halls) to mobile banking services (through apps and just by the send of an SMS).

Mobile loans are also being offered at a lower interest rates and short timeline as compared to taking the loans from the banks directly. Cooperative Bank of Kenya for instance issues loans via mobile at the interest of 1.16 percent for a duration of between one month to three months.

According to the survey, an estimated annual income for people engaged in formal employment in the country rose from 796.4 billion shillings to 1,497.3 billion shillings and this has led to households increasing their capability to take up loans with the ability to ‘pay them back.’

On 30^th, the Kenya National Bureau of Statistics announced that the Kenyan inflation for the month of November had risen from 6.47 percent in October to 6.68 percent mainly due to the high prices of food and petroleum products. This implies that Kenyans are spending more on food than on anything else but the CBK Governor Patrick Njoroge has said that the inflation is unlikely to go beyond.