Drought-affected Garissa, Marsabit, Isiolo and Samburu counties have been named counties with the worst loan defaulters, including dues owed to shylocks and shopkeepers.
The rates of default in the named four counties ranges between 47 and 74 per cent. This is more than double the national average of 24 per cent, according to a survey by the Central Bank of Kenya (CBK).
Nandi, Busia, Nairobi and Siaya had the lowest default levels, an outcome that seems to influence money lending patterns by digital lenders and banks across the country’s 47 counties.
These four counties with the worst loan defaulters in the Northern Kenya have been the worst affected by drought in the past two years, which has led to suffering of families that depend on livestock as their main source of livelihood.
The findings of the household survey by the FSD Kenya, CBK and the Kenya National Bureau of Statistics (KNBS) show that 50.9 per cent of the respondents with loans defaulted on mobile loans last year.
Many of the cases in the named counties with the worst loan defaulters are linked to mobile loans which is the most preferred way of lending in the counties that have few physical banking facilities.
The survey defines a loan default as including paying late, not honouring a scheduled repayment, and not making any payment at all.