Kenyans skipping meals to service loans, says report
Neighbourhood shopsFurther demonstrating the dire nature of the situation, those who take commodities on credit from neighbourhood shops tripled. The report noted that 29 per cent of Kenyans are this year taking goods on credit from shopkeepers, up from 10 per cent in 2016. In addition to using up a huge chunk of their earnings to servicing the largely imprudently incurred debts and reducing disposable cash, FSD said the surge in the number of people taking the basic commodities sold in local shops on credit is also a factor of the economy. The lobby noted that digital loans have been critical in driving up loans advanced to Kenyans. Seven per cent of all loans are being advanced by the digital apps while another 10 per cent are by mobile banking – the fintechs owned by commercial banks. This is up from a negligible proportion for the digital apps and about seven per cent for the bank-owned mobile lending platforms. “Digital borrowing is rising fast, driving up formal borrowing rates. Nine per cent of Kenyans currently have a mobile banking loan and seven per cent currently have a loan through digital apps. However, the biggest leap is in the use of shopkeeper goods on credit, this is now at 29 per cent possibly a reflection of economic stress,” said FSD. FSD noted that financial inclusion has increased to 83 per cent in 2019, a far cry from about 27 per cent in 2006. The inclusion has however only meant access to mainstream financial services, with most Kenyans reporting that they are not financially healthy as measured by their ability to manage day to day, cope with risk and invest in the future.
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