Non-performing Loans: Thousands of Kenyans risk being listed on CBR (credit reference bureaus) for defaulting on loan payments amounting to billions of shillings.

According to CBK, Kenyans had defaulted on loans amounting to Ksh 404 billion from October 2019.

This means that the number of defaults had risen by Ksh. 55.9 billion from Ksh 349.9 billion from the period ending February. On the same note, since the first case of coronavirus was recorded, Kenyans had defaulted on bank loans worth Ksh. 53.95 billion.

According to Patrick Njoroge, CBK Governor, “Non-performing loans (NPLs) increases were noted in the transport and communication, energy and water, tourism, restaurants and hotels and real estate sectors, mainly due to disruptions of the businesses. The increases in NPLs were partially offset by repayments and recoveries in the trade, manufacturing, building and construction sectors.”

By April of 2020, the number of Kenyans that had been listed on CBR as defaulters had hit 3.2 million from 2.7 million who were on the list last year. This represented a 12% increase for non-performing loans up from 9.5%.

Most of the defaulters are borrowers on Mobile lending Apps. Over 400 thousand of the 2.7 million had defaulted on Ksh.200.00 and below. Ironically, the CBK had banned Mobile Lending from blacklisting borrowers.

The latest data from CBK ( Central Bank of Kenya) these small lenders will borrow loans from one app to pay another loan in a different app.

This often traps the borrowers in a cycle of debt.