Kenyans' big appetite for loans could stifle economic growth
Kenyans have borrowed their government’s bad manners; living off borrowed money. As a result, most people, just like their government, are now knee deep in debt and are still busy digging in.
According to a report by Financial Sector Deepening, two out every three Kenyans are struggling to repay debt. Some even choose to go hungry to save money to pay debts.
And just like their government, some have had to borrow money from other credit providers so as to pay more pressing debts. Others have been forced to sell their assets—well, to pay debts.
Unsurprisingly, 18 per cent of the borrowers have defaulted on their loans to digital money lending platforms, shylocks and even banks. Recently, The Standard reported that more than 2.5 million borrowers have been blacklisted from accessing loans after failing to service other loans.
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We are at a dangerous crossroads. If a person has a debt they cannot repay, it means they are unlikely to have money to improve their lives, let alone meet their basic needs.
If indeed such a huge chunk of the population is mired in debt, it means our economy is going to hell in a handcart.
For although a loan is good as it has the potential to improve an individual’s life or a nation’s economy, borrowing money you cannot afford to repay could have the exact opposite effect.
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This usually leads to borrowers being stripped of their investments and even personal effects by auctioneers.
At the national level, some have warned the Chinese could one day take over some of the infrastructure they have built if Kenya defaults on loan repayment.
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Love of borrowed money could be our country’s bane. That’s why something should be done urgently to save the nation from going down the precipice. Sadly, the Government has ignored advice and its appetite for loans keeps on growing by the day.
But gullible citizens must be protected. There is need to shield borrowers, especially from the digital platforms, which lend money at exorbitant interest rates. That’s why MPs should speed up their bid to cap interest rates on mobile loans to save Kenyans from the loan sharks.
Importantly, we must learn to borrow diligently or to live within our means to save the country from falling into the fathomless pit of indebtedness.
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