Home » Ethnic stereotypes broken and myths debunked as CBK releases list of counties with people most notorious for not paying back borrowed money

Ethnic stereotypes broken and myths debunked as CBK releases list of counties with people most notorious for not paying back borrowed money

by Joshua Wanga
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A look through a county list from a survey conducted by the Central Bank of Kenya blew away the widely held belief that if you lend money to a Muslim, he or she is certain to pay back. However, even more puzzling was those who were found to be the most prompt and disciplined when it comes to debt paying.

Drought-hit Marsabit, Garissa, Samburu and Isiolo counties have the highest proportion of borrowers defaulting on credit, including dues owed to shopkeepers and shylocks. Noticeably, these counties have high levels of Muslims who have been widely assumed to be prudent in debt paying.

The rates of default in the four counties ranged between 47 per cent and 74 per cent and more than double the national average of 24 per cent, a survey part-conducted by the Central Bank of Kenya (CBK).
Busia, Nandi, Siaya and Nairobi had the lowest default levels in findings that look to influence lending patterns by banks and digital lenders across Kenya’s 47 counties.
Nairobi, on the other hand, has always been considered as the county of hard-nosed crooked operators.

The findings of the household survey by the CBK, FSD Kenya and the Kenya National Bureau of Statistics (KNBS) show that 50.9 per cent of the respondents with credit defaulted on mobile loans last year.
Consumers also defaulted on credit chalked up from neighbourhood shopkeepers and shylocks as well as family and friends despite the rapid growth of the banking industry, whose default levels stood at 14 per cent of the borrowed loans.

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 four counties are among the 11 identified by the National Drought Management Authority as suffering from acute drought and severe vegetation deficit, which has hit livestock farmers.
The others are Kajiado, Kitui, Mandera, Laikipia, Tana River, Turkana and Wajir.
“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 states.

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