Bank loan defaults have crossed the half a trillion shilling mark for the first time; setting up thousands of borrowers for property seizures in an economy hit with reduced cash flows and inflation; that has squeezed household budgets and demand for goods.
The latest Central Bank of Kenya (CBK) data shows that defaulted loans rose by Sh30.6 billion in June to Sh514.4 billion; the sharpest monthly increase in recent history.
The mounting defaults are a reflection of the struggles of workers and businesses in an economy; that is yet to fully recover from a coronavirus-induced slump, which triggered job cuts and business closures.
A severe drought, surging inflation that has hit demand for goods, scarce jobs and prolonged political uncertainty in the wake of the disputed presidential vote have created a growing pool of distressed borrowers whose assets are being seized by newly aggressive lenders.