Number of loan defaulters doubles despite Ruto's intervention

The number of Kenyans listed as  loan defaulters has nearly doubled over the last year.

This is as some of the borrowers who benefited from the intervention of the Kenya Kwanza administration after it came to power find themselves blacklisted again.

The number of borrowers blacklisted by different lenders, mostly digital lending platforms run by commercial banks and mobile digital loan apps, has risen by a staggering 3.85 million. 

The high number of negative listings appears to negate the intervention by President William Ruto, whose campaign resulted in over 4.2 million Kenyans having their bad credit scores repaired in the last year.

A new report on credit trends in the country by Transunion Africa, a credit reference bureau, shows that the number of Kenyans adversely listed by different CRBs stood at 7.74 million over the first quarter of this year.

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This was a 99.2 per cent increase from 3.89 million borrowers who had been listed as defaulters over a similar quarter in 2023.

Transunion noted that the negative listings had dropped following the implementation of the Central Bank-backed credit repair framework between the first quarter of 2023 and the fourth quarter of 2023.

The default list has, however, surged, a possible indicator that borrowers may have been unable to sustain repayments.

Among those hit by high default rates are borrowers on President Ruto’s pet project - the Hustler Fund - which lends to individual and small businesses, where more than 13 million borrowers are in default of Sh7 billion.

The credit repair framework was aimed at mending the credit history of some 4.2 million borrowers from digital platforms with loan terms of 30 days and below.

These included loans offered by commercial banks, microfinance banks and mortgage finance banks regulated by CBK.

At the time, these loans were valued at Sh30 billion, which according to the Central Bank, accounted for 0.8 per cent of the gross banking sector loan portfolio of Sh3.6 trillion as of the end of October 2022

The 4.2 million borrowers whose loans were listed as being in default saw their credit standing repaired from non-performing to performing in 2023.

This was after CBK’s directive to banks and other lenders to give borrowers discounts of at least 50 per cent on outstanding loans and extend repayment periods.