More Kenyans have fallen into hard times in the last four years according to a new survey conducted by the Kenya National Bureau of Statistics on behalf of the Central Bank of Kenya (CBK). According to the report, debt repayment has resulted in Kenyans reducing food expenditures to pay back loans.
According to the 2024 FinAccess Household Survey Report released on Tuesday, December 3, loan defaults jumped 6 per cent between 2021 and 2024. According to the survey, the number of Kenyans who didn’t pay back their loans at all now stands at 16 per cent marking the highest level in nearly two decades.
This new rate is the highest since 2005 when the debt default hit 30 per cent. The defaulting then was largely driven by widespread economic instability and structural inefficiencies in credit management.
Last year, the rate reached 15 per cent due to factors such as high interest rates, inflation, and delayed government payments to contractors. The Central Bank of Kenya (CBK), in October, lowered the base lending rate. However, bank lending rates did not follow suit. In terms of inflation, the country is enjoying the lowest inflation rate in 14 years, going below 3 per cent. It stands at 2.8 per cent in October.
The number of those who paid late, missed a payment, or paid less than they borrowed dropped to 37.2 per cent from 45.8 per cent in 2021. According to the survey, the number of borrowers who paid on time or did not miss a payment increased slightly to 45.9 per cent up from 42 per cent.
That is not all, the survey revealed that 81.7 per cent of Kenyans are financially unhealthy, facing challenges in managing daily expenses and investing for the future.
The survey found that Kenyans opted to cutting down on other expenses, run down savings, look for additional work or business, and take another loan to repay all in a bid to pay back debts.
Worse yet, the report discovered that the most popular action to repay debt is by reducing expenses on food with females surpassing males by recording 63.0 per cent and 57.1 per cent respectively.
“The least sought action to pay is by selling or giving assets and belongings, which saw females record 20.7 per cent and males 23.1 per cent,” read part of the report.
According to the report, men are more willing to part with their assets and belongings as compared to females.
Furthermore, the report has revealed that 9 per cent of Kenyan adults are financially excluded, with rural youth making up nearly half. Lack of phones and ID cards cited as key barriers.
The survey also revealed a troubling decline in financial health, with only 18.3 per cent of Kenyans considered financially healthy in 2024, down from 39.4 per cent in 2016. The report further found that only 18.3 per cent of Kenyans are considered financially healthy in 2024 down from 39.4 per cent in 2016.
This represents a 21.1 per cent increase in the number of Kenyans who are financially unhealthy compared to the last few years.
In response, Treasury Cabinet Secretary John Mbadi responded calling for a closer examination of the country’s financial health.
"The puzzle of rising financial inclusion amidst deteriorating financial health among Kenyans demands urgent attention," he stated.
