Shopkeepers turn to be Kenyan’s valued economic saviour

Kenyans have been repoted to borrow more from the local shopkeepers than from anybody else.

A report by FinAccess Household Survey 2019, released in conjunction with the Central Bank of Kenya (CBK) and the Financial Sector Deepening Trust (FSD) showed that Kenyans borrow more from shopkeepers than from anybody else.

Borrowing from shopkeepers is now higher than the fastest growing digital loans in Kenya.

Digital loans among Kenyans grew significantly though, from 0.6 percent to 8.3 percent. Kenya has over 500 digital loan service providers. There are calls for the CBK to regulate the sector.

Kenya has been leading other countries, for the last 10 years in financial inclusion with the success attributed to mobile money platforms such as M-Pesa.

A report released by the Central Bank of Kenya now paints a different picture of the majority of Kenyans’ borrowing habits despite the notion that mobile money loan is the leading source of credit for the majority.

The number of Kenyans borrowing from shopkeepers has tripled to 29.7 percent from 9.9 percent in the year 2016. The number was last highest in 2006 at 22.8 percent.

10.1 percent of Kenyans still borrow from family, friends, and neighbors. This is an increase from 6.6 percent in 2016.

Kenyans seem to have refrained from taking personal loans from financial institutions. Personal loans from banks dipped slightly to 4.3 percent from 4.4 percent in 2016.

Microfinance institutions also saw a drop in credit uptake to 0.9 percent.

The number of Kenyans facing hard economic times almost doubled according to the report. In 2016, only 34.3 percent of Kenyans were considered poor (being in the financial red zone).

Currently, the number of Kenyans living from hand to mouth has increased to 51 percent.

Some of the challenges Kenyans are facing include high taxes from the government, the rise in the cost of living, unemployment and general corruption that is denying them crucial services from the government.