03-02-2021 by redazione
Five million Kenyans are unable to pay their debts to the banks or credit institutions they borrowed from for their activities during the pandemic emergency.
This is the worrying figure provided by the Credit Reference Bureau, which has added five million more citizens to its blacklist of defaulting debtors since August last year.
The number of Kenyans in debt has now risen to 14 million, after a six-month temporary grace period was granted to those in debt or paying loans from 1 April last year. Since September, however, interest has been accruing again and the situation has not improved.
According to experts, the situation will start to improve again in the coming months, when the economy will finally recover and inflows will resume, allowing those in debt to the banks to start paying again.
The call is also out to the "underground", i.e. all the apps, microfinance providers and "digital lenders" that do not support the Central Bank's efforts to help those in debt.
Adding to the growing number of those who fail to honour their investments is data from the Kenya National Bureau of Statistics which reports that 1.7 million workers from April to June 2020 lost their jobs. Loans defaulted on by applicants would amount to 73 billion shillings, according to the Central Bank.
These defaults have also affected interest on loans, as banks have asked the CBK for permission to re-evaluate the cost of loans based on borrowers' risk and increase the risk premium.
The move will see an increase in the interest rate spread - what is left after banks deduct what they pay for deposits from what they earn from loans.
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