Cars and home owners in Kenya have defaulted on loans worth Sh. 27.8 billion within the last 12 months, pointing to a high rate of default. This has been revealed by the Central Bank of Kenya quarterly economic review report.
The report shows that bad loans have also been on their way up, and increased by Sh. 16.4 billion from Sh. 27.5 billion in September 2020 to Sh. 43.9 billion in 2021.
Out of these defaults, home owners’ defaults rose by 20 per cent which was equivalent to Sh. 11.5 billion. Their defaults increased from Sh. 57.7 billion to Sh. 69.2 billion. As at December 2020, there were 26,971 home loans in the market down from 27,993 in December 2019.
The CBK report further showed that as at September 2020, the trade industry had the biggest pile of bad debt at Sh. 99.1 billion followed by personal loans which had a pile of Sh. 70.4 billion in bad debts. The manufacturing sector had a stock of Sh. 65.5 billion and agriculture had a stock of Sh. 19.6 billion in bad debts.
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The data from CBK points to an increasingly difficult financial environment for Kenyans, whose appetite for loans has been on the rise. For example, the amount of loans that Kenyans are borrowing on Fuliza everyday has risen to over Sh. 1.2 billion.
In the six months to June 2020, Kenyans borrowed up to Sh. 1 billion on Safaricom’s Fuliza overdraft. This saw Fuliza loan rise from Sh. 81 billion to over Sh. 176 billion. In the six months to June 2021 the amount borrowed on Fuliza hit Sh. 220.38 billion, marking a 25 per cent increase from the amount that was borrowed in the same period in 2020.
