A Financial Sector Deepening (FSD) survey has revealed that farmers, the poor and the elderly are hit hard by loans they take for varied reasons forcing them to live in a debt cycle.
The Central Bank of Kenya (CBK) backed survey stated that farmers are the worst hit by the Kenyan debt crisis.
“Levels of debt stress are high across the board but particularly for farmers, the elderly and the poor. For these groups, difficulties in repaying loans resulted in asset sales, cutting back on expenditure, or borrowing to repay existing loans,” says the FSD Kenya study quoted by Business Daily on Friday.
According to the report, one in every five Kenyans has defaulted on a loan in the past year.
“Two thirds of borrowers in the country have experienced at least two symptoms of debt stress including default. This includes being over-leveraged and selling assets, borrowing and cutting expenditure to repay loans” the report reveals.
As at the end of May this year, CBK data showed that commercial banks advanced Sh430.1 billion to private households. Mobile-based digital lenders are also growing due to increased borrowing. Unfortunately, a good share of the stock of total bad debt held by financial institutions is under these three groups.