Borrowers Default Ksh 30 Billion In Loans, Auctioneers On Standby

By Nsunjo Erica

Kenyan borrowers have defaulted 30 billion shillings in loans between March and June 2020 as the Covid-19 pandemic continues to bite investments and savings.

According to sources, most banks have repossessed prime properties from defaulting clients and put them up for auction are facing a huge task in finding buyers amid a property slump over the last few years.

“Under instructions received from our principals the charge in the exercise of their statutory powers of sale conferred upon them, we shall sell by public auction the property together with all the improvements erected thereon,” said the auctioneer in a public notice.

Banks have hired auctioneers to dispose of the Laibon Hotel in South B and the Hotel Grace Villa and Guest House in Ngara.

Kenya Shield Auctioneers is seeking between 175 million and Sh190 million for the six-story Laibon consisting of 56 rooms, a bar, a restaurant, and offices sitting on 0.115 acres.

Garam Investment Auctioneers is seeking Sh112.5 million for the Hotel Grace Villa and Guest House that is located near Jamhuri High School along Limuru Road.

Garam is yet to find buyers for prime hotels it put on auction months ago including the Sh400-million UpperHill Hotel and the Roof Garden Hotel in Machakos associated with former Cabinet minister Gideon Ndambuki, valued at Sh75 million.

According to Garam Auctioneers, the plot extends to 0.27 acres approximately and is developed with an Asian type house modified to a commercial block partly as a hotel or guest house.

With the defaulted loans having risen to Ksh 30 Billion, lenders may be forced to auction properties presented as collateral by borrowers as they seek to recover the funds issued through loans.

Following the government’s go-ahead to banks to grant loans to individuals despite the pandemic, many Kenyans opted to take loans due to these harsh economic times following massive layoffs from their places of work.

Following increased levels of unemployment, individuals and businesses opted for loans, and according to banks, about loans worth Ksh 844 billion were restructured to cushion Kenyans from Covid-19.

Due to the COVID-19 pandemic, Kenyan citizens who have been taking loans and those that had taken loans before have been unable to pay due to dwindling personal funds, banks have been pushed into a shit hole.

In August 2020, the Central Bank of Kenya stated that non-performing loans (NPLs) rose to Ksh 379.9 billion in June, from Ksh 349.9 billion in February.