According to FinAccess Household Survey 2019 released on Wednesday by Central Bank of Kenya and Financial Sector Deepening Trust (FSD), shopkeepers lend more money than Banks and digital applications.
The study indicated that households borrowing from shopkeepers were the highest in over a decade with the last high recorded in 2006 at 22.8 per cent.
This form of credit was highest, beating even the fast-rising digital loans which grew to 8.3 per cent from 0.6 per cent in 2016.
The annual survey attributed these borrowings to the tough economic times that many Kenyan families were going through, with many of them living from hand to mouth.
For instance, Janet, a shopkeeper in Rivarori market in Gachie, Kiambu County revealed that she lends to her customers because she understands the predicament that most of them were going through.
“Things are tough. Customers are borrowing more than before. I lend to at least ten people every day. Do I have a choice? They are parents," Janet told The Star.
She added that most people borrowed maize flour, cooking fat, sugar, bread, and milk.
On the other hand, CBK Governor Patrick Njoroge stated, “The cost of living has been rising. Kenyans are spending more on health, transport, and housing. The worsening climatic condition has taken a toll on agriculture, affecting food production. This has dented the financial health of families”.
The study also linked the rising inflation to the high tax regime.
In 2018, the government imposed 16 per cent VAT on petroleum products, which had a negative spiral effect on the general economy.
