Households reported that 39.3 per cent of the credit extended to them was spent on servicing subsistence needs- those that are necessary for their survival, such as buying food, domestic water and paying for housing- while 20.9 per cent was sunk into school fees.
Households also borrowed money to purchase agricultural machinery (0.2 per cent), construction of dwellings (4.6 per cent), buy vehicles (one per cent) and livestock (1.3 per cent).
The study also found that the most preferred source of credit for most Kenyans is merchants or shops with 28.2 per cent followed by self-help groups (chamas) and relatives or neighbours with 19.4 per cent and 14 per cent respectively.
Most of the loans borrowed by households in Kenya are spent on food, school fees and other subsistence needs, a survey by the Kenya National Bureau of Statistics (KNBS) showed, underlining the financial constraints facing many homes.
Households reported that 39.3 per cent of the credit extended to them was spent on servicing subsistence needs- those that are necessary for their survival, such as buying food, domestic water and paying for housing- while 20.9 per cent was sunk into school fees.
“About 16.1 per cent of loans obtained went towards investments, purchase of agricultural inputs (5.4 per cent), medical expense (3.8 per cent), purchase of land (2.8 per cent), and ceremonies (1.2 per cent)” the KNBS said.
Households also borrowed money to purchase agricultural machinery (0.2 per cent), construction of dwellings (4.6 per cent), buy vehicles (one per cent) and livestock (1.3 per cent).
BD GRAPHIC
The study also found that the most preferred source of credit for most Kenyans is merchants or shops with 28.2 per cent followed by self-help groups (chamas) and relatives or neighbours with 19.4 per cent and 14 per cent respectively.
About 11.2 per cent of respondents obtained loans from Saccos compared to commercial banks (8.8 per cent). Mobile money platforms (7.6 per cent), micro finance institution (5.3 per cent), employers (1.3 per cent) and shylock (1.2 per cent) were the other sources of credit.
Uptake of government loans was low at 1.2 per cent despite billions of shillings pumped towards Youth and Women development funds.
The survey established that the source of credit determined the intended use.
“Analysis by sources shows that loans from merchants or shops and mobile phone platforms were used for subsistence needs. A higher proportion of credit from commercial banks (32.5 per cent) and micro finance institutions (36.5 per cent) was used for business or investment,” the KNBS said.
Most loans sourced from saccos (37.4 per cent) were used on school fees.
Nyamira County had the highest proportion of households that sought credit at 66.1 per cent with a success rate of 98.5 per cent. Other counties with over 60 per cent credit uptake and high success rate included Migori, Wajir and Vihiga.
“Counties with low proportions of households that sought credit were Busia (5.5 per cent), Mandera (6.0 per cent) and Samburu (7.0 per cent). Marsabit had the lowest proportion of households that successfully acquired credit,” the KNBS said.
According to statistics bureau, one third of households sought credit in the 12 months preceding the survey and recorded a high success rate of 90.1 per cent. Embu County had the highest success rate at 98.9 per cent.
There was no major disparity in the proportion of rural and urban households that sought and successfully acquired credit.
The proportion of rural households that sought credit was at 34.2 compared to urban at 33.1 per cent while the success rate was 89.7 per cent and 90.6 per cent respectively.
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