Counties hit by drought record highest levels of loan defaults – Kenya Broadcasting Corporation

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Counties experiencing drought have recorded the highest levels of debt distress among borrowers who have been unable to repay their loans, a report by the Central Bank of Kenya shows.
The FinAccess Household Survey Report by CBK indicate that Marsabit, Garissa and Samburu counties have the highest debt distress levels of 74pc, 59pc and 58pc among adult population, respectively.
“This may be explained by climate-related shock of drought facing these counties that has reduced the ability of borrowers to repay their loans,” said CBK.
Wajir County and Mandera County have debt distress levels of 44pc and 30.3pc respectively.
This comes as the CBK announced the start of Credit Repair Framework with commercial banks, microfinance banks and mortgage finance companies which targets to delist 4.2 million mobile loan defaulters on the Credit Reference Bureau (CRB).
“Busia, Nandi and Siaya recorded the lowest incidence of loan defaults all recording below 5pc among adult population of reported loan defaults,” added CBK.
Under the framework banks are expected to forgive half of the loans equivalent to Ksh 15 billion out of loan defaults estimated at Ksh 30 billion in order to encourage repayment.
Financial institutions are expected to then enter into a repayment plan with the borrowers for a period up to May 31, 2023, for the balance of the loan.
Despite the high loan defaults recorded in Garissa, Wajir, Mandera and Marsabit consumers in the four counties also had the least awareness of CRB.
Wajir County has the lowest level of awareness as only 3.2pc of adult population in the county is aware of CRB.
In Mandera County, 8.6pc of adult population are aware of CRB while in Marsabit the level of awareness is 8.9pc and Garissa County 10pc.
The awareness was however highest in Nairobi County at 68.7pc followed by Trans-Nzoia County 58.8pc, Siaya County 56.7pc, and Busia County 57.3pc.
According to the report Wajir County and Mandera County have the lowest percentage of adult population who are aware of the cost of borrowing in the country at 15.5pc and 15.8pc respectively.
CRBs which are regulated by CBK were introduced in Kenya to collect and provide consumer credit information on borrowers with the aim of reducing loan defaults by profiling bad borrowers.
Currently, only three CRBs which include Metropol, Creditinfo and TransUnion have been licensed by CBK.
Watch what’s live now on KBC Channel 1 and our other TV Stations. Never miss new episodes from your favorite shows, reruns and movies. Stream online for free today.
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