Today, at least 135 vehicles bought recently through bank loans, and whose owners have been unable to repay the debt, will start their journey to new owners.

Advertisements from two banks in local dailies last week asked Kenyans to send bids for the 135 vehicles, with reserve prices set for each.

The highest bidder for each will be the eventual buyer.
Kenya Commercial Bank (KCB) advertised 97 vehicles for sale while NIC Bank offered 38 — with a notice that there were more on its website.

Ninety-three of the advertised vehicles, or 68 per cent of them, are commercial automobiles — trucks, tippers and trailers — showing a trend where people buy vehicles for business but are unable to pay for them.

Sale of the motor vehicles, where buyers will have the possibility of getting loans to settle the debts, is just one manifestation of the rise in non-performing loans.

In August, unpaid loans rose to 10.7 per cent from 9.9 per cent the previous month, according to the Central Bank.

It is the first time since 2007 that the percentage has hit double digits.

Besides the Sh. 2.8 billion being held by government contractors, Sh. 5 billion of the non-performing loans is owed by local manufacturers while another chunk is sinking in real estate sector.

This feature was first published in the Daily Nation.

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