Over 3 million bank accounts were activated in 2020 for quick personal, household loans

Over 3 million bank accounts were activated in 2020 for personal, household loans

The data from the Central Bank of Kenya (CBK) reveals that an additional 3.045 million bank accounts were opened in 2020.

This means that there were over 11.42 million loan accounts last year, an increase of more than a third from 8.38 million accounts in 2019.

According to CBK, the accounts were opened to aid personal and household loans.

“Total loans under the personal and household sector increased to Ksh.843.6 billion last year, from Ksh.745 billion in the year before,” said CBK.

Other sectors that registered an increase in the number of loan accounts included mining and quarrying, which increased by 42 percent, transport and communication (14.6 percent), manufacturing (10.2 percent) and tourism, restaurant and hotels (7.9 percent).

There was, however, a 33 percent dip in the number of loans in the financial and insurance sector.

The report found that close to 15 percent of rural households took a loan from a financial institution, compared to just under 10 percent from urban areas.

Another report by CBK also shows that growth in lending to the private sector in the country went up 7 percent in August this year, from 6.1 percent in July owing to an increase in economic activities despite COVID-19 disruptions.

Growth in the private sector was witnessed in the areas of transport and communication sector which went up 11.8 percent followed by manufacturing at 9.3 percent.

The regulator said uptake of loans was noted with regards to lending under the Credit Guarantee Scheme that was operationalised in October 2020.

This came as Kenya’s economy contracted for the first time in nearly three decades when the coronavirus pandemic hit the key sectors, including tourism, education, transport and manufacturing.

Kenya’s output or Gross Domestic Product (GDP) declined by 0.3 percent in 2020.

According to the World Bank, taking out loans as a coping mechanism was common among refugees while selling assets was higher among Kenyan nationals.

This comes after a financial statement from Safaricom showed that Kenyans borrowed Ksh.1.34 billion from Fuliza, in the six months to September this year. Fuliza is owned by Safaricom, NCBA and KCB.

It has also been revealed that Kenyans gambled Ksh.83.2 billion via M-Pesa in the six months to September 2021, offering a peek into the multi-billion-shilling sports betting industry.

This was double the betting cash that was channeled through the mobile money transfer service in a similar period last year, according to financial results released by M-Pesa parent company Safaricom on November 10.

This translates into Ksh.422.2 million betting cash going through the platform in a day.

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Lawrence Baraza is a prolific writer with competencies in Digital Media, Print, and Broadcast. Baraza is also a Communication Practitioner currently spearheading Digital content on Metropol TV's Digital Desk.

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