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NEWS & CURRENT AFFAIRS

The Nairobian

Loan defaulting on rise, report

National

By Stephanie Wangari | Dec 03, 2024

Report shows that 16.6 percent of borrowers are defaulting on loans completely. [File, Standard]

A new FinAccess Household Survey reveals that 81.7 per cent of Kenyans are financially unhealthy, struggling to manage daily expenses and invest for the future.

The survey, conducted by the Central Bank of Kenya (CBK) in collaboration with the Kenya National Bureau of Statistics (KNBS) and Financial Sector Deepening (FSD) Kenya, highlights a worrying decline in financial preparedness for the future.

The survey also identifies rising debt distress as a critical issue, with 16.6 per cent of borrowers defaulting on loans completely, up from 10.7 per cent in 2021.

“Ongoing consumer protection issues and rising debt stress are worrisome. Improving financial health must be a central priority for policy and innovation in the coming years,” the report states.

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It further urges policymakers, researchers, innovators, development partners, and other stakeholders to utilize the findings to address financial health challenges effectively.

Financial exclusion remains a concern, with 9 per cent of Kenyan adults entirely excluded from financial systems, predominantly rural youth, who account for nearly half of this group. The primary barriers to inclusion include the inability to afford mobile phones and the lack of national identification cards.

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Counties such as Kiambu, Nairobi, Kirinyaga, Nyeri, Isiolo, and Mandera showed the highest financial inclusion levels, while Turkana, West Pokot, Elgeyo Marakwet, Trans Nzoia, Migori, and Narok ranked as the most financially excluded.

The 2024 FinAccess Survey analyzed data from individuals aged 18 and above across all 47 counties. Rural respondents made up 59.3 per cent of the sample, while urban respondents accounted for 40.7 per cent.