Kenyans Borrowing Recklessly to Maintain Lavish Lifestyles

A report released by the Savings Societies Regulatory Authority (Sasra) has revealed that Kenyans are borrowing recklessly to sustain a lavish life.

According to the study, Kenyans are borrowing irresponsibly to buy consumable goods instead of investing in revenue generating projects leading to a rise in loan defaults in saccos and banks.

The report, which reviewed loan books of 233 saccos in 43 counties comprising 176 deposit taking (DT) institutions and 57 systematically important non-DT saccos, says loan default mainly arises from borrowers who spent the money lavishly.

Most people who are currently taking up loans in saccos and banks spend this money to either buy new cars, move into bigger and more expensive houses, finance weddings, or go on holidays and honeymoons just to maintain a certain standard of living.

Breakdown of the Figures

A total of 12,021 borrowers were studied in the report by Sasra, which revealed that 9 percent (1,088) spent a total of 19.2 billion shillings to buy motor vehicles, furniture and other consumer durables.

3,177 borrowers, on the other hand, spent 10.7 billion shillings on meeting basic needs for their families such as food, clothing, shoes, and household products.

Consumption and social needs took up 14.58 percent (47.9 billion shillings), while education of children and professional career development accounted for 12 percent (39.4 billion shillings) of the total 328.4 billion shillings loans taken up.

Of the 12,021 borrowers, 10,282 spent 35.2 billion shillings on funding primary education for their children, indicating the importance of foundational learning among Kenyans.

Sasra’s report further indicated that 143 Kenyans borrowed 437 million shillings to cater for burial expenses, weddings and other cultural rites of passage.

Utility bills such as water, electricity car and electronic repair expenses totaled up to 17.6 billion shillings borrowed from saccos.