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Kenyans Are Going Hungry to Pay Debts – Report

BY Soko Directory Team · July 24, 2019 09:07 am

A good number of the Kenyan population is striving to pay debts, with many having to forgo their meals to see their loans repaid according to a new report.

It is estimated that at least two out of three Kenyans, as Financial Sector Deepening (FSD) Kenya reports, are having debts.

FSD indicates that most of the loans and debts are owed to digital lenders, traditional banking service providers, and shylocks.

According to FSD, Kenyans are drowning deeper in unsustainable debts as opposed to making savings and credit that uplifts the wellbeing of the borrower.

Those with debts have to employ other techniques in order to survive, with some getting loans from other lenders, selling their assets or taking them to the shylocks and most have to go hungry for a while to save money for debt-repayment. The aforementioned accounts for 51 percent of the population.

The FSD report also shows that at least 24 percent use almost half of their earnings to repay debts and about 18 percent are enlisted due to loan defaults.

“Sixty-seven percent of borrowers experienced at least two symptoms of debt stress, including default, being over-leveraged and selling assets or borrowing or cutting expenditure to repay loans,” FSD report said in part.

Corner shops are also not left out of this dire situation as the rate of purchasing goods on credit has also tripled from 10 percent in 2016 to 29 percent this year.

Kenyans mostly purchase household goods on credit from these kiosks since they are well known or they are frequent customers. The problem comes in when they strive to pay or fail to pay to result in bad debts.

These debts affect the country’s economy adversely since the small-scale retails are real-time contributors to the country’s economic growth.

Mobile lenders, on the other hand, have succeeded to tame the well-being of individuals and enlisting a good number to the Credit Reference Bureau. (CRB)

Digital lenders account for 7 percent of all loans granted to Kenyans while another 10 percent are by mobile banking.

“Digital borrowing is rising fast, driving up formal borrowing rates. Nine percent of Kenyans currently have a mobile banking loan and seven percent currently have a loan through digital apps…” says FSD.

Financial inclusion has heightened tremendously, from 27 percent in 2006 to 83 percent in 2019, according to the FSD report.

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