Kenyans Buy Food Using Loans, Credit Amid High Cost Of Living

A new survey has shown that a section of Kenyans take loans to buy food amid the high cost of living that has seen the prices of food soar.

In the survey, World Bank noted that 12 percent of households in Kenya take loans to buy foods while about 34 percent buy foods on credit.

The survey indicated that most households purchasing food on credit are from Arid and Semi-Arid Land (ASAL) counties.

ASAL counties include Garissa, Wajir, Mandera, Marsabit, Turkana, Samburu, West Pokot, Elgeyo-Marakwet, Baringo, Isiolo, Laikipia, Nakuru, Lamu, Tana River and Taita-Taveta.

Others are Kilifi, Kwale, Embu, Kitui, Meru, Tharaka-Nithi, Nyeri, Machakos, Makueni, Kajiado, Narok, Kiambu, Migori and Homa Bay.

“Households continue to rely on borrowing, a trend that has persisted since the start of the pandemic, especially through short-term borrowing on mobile money platforms

“The trend raises concerns of increased indebtedness, especially given that half of Kenyans are unaware of the true cost of borrowing,” the survey indicated.

Other than relying on borrowing, a section of Kenyans reduce food and non-food consumption, seeking assistance from friends and family and seeking additional income-generating activities.

In November, WoK reported that Marsabit, Garissa, Samburu and Isiolo counties have the highest proportion of borrowers defaulting on credit.

The survey showed that 50.9 percent of surveyed respondents had defaulted on mobile loans last year and owed other lenders such as shopkeepers and shylocks.

About 41.8 per cent of those owing friends and family defaulted, with 40.6 per cent and 31.3 per cent owing shopkeepers and shylocks unable to clear their debts.

The survey conducted by Central Bank of Kenya (CBK), FSD Kenya and the Kenya National Bureau of Statistics (KNBS) showed the rates of default in the four counties ranged between 47 percent and 74 percent.

“Marsabit, Garissa and Samburu counties recorded the highest level of debt distress proxied by default rates of 74 per cent, 50 per cent and 58 per cent among the adult population, respectively

“This may be explained by the climate-related shock of drought facing these counties that have reduced the ability of borrowers to repay their loans,” the survey showed.