Kenyans drop fridges, sofas and cars as loan collateral, turn to livestock
Data from the Business Registration Services reveals that the total number of items pledged fell to 132,374 in the year ended June 30, with most Kenyans now securing loans through livestock and financial securities.
Kenyans have cut back on using furniture, fridges, television sets and motor vehicles to secure loans, with official data showing a 14.4 per cent drop in such collateral over the past year.
Data from the Business Registration Services (BRS) reveals that the total number of items pledged fell to 132,374 in the year ended June 30, with most Kenyans now securing loans through livestock and financial securities such as shares and bonds.
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The BRS figures show that furniture such as sofa sets and chairs saw the steepest decline, dropping 32.9 per cent to 16,680 items.
“Household electronics, including fridges and television sets, fell by 19.5 per cent to 49,737, while the number of motor vehicles used as collateral decreased by 3.09 per cent to 65,957 from 68,060 in the previous year,” reads the report.
BRS, which manages the Movable Property Security Rights (MPSR) registry, is the official custodian of records for goods pledged as loan security in Kenya.
Banks reduced lending
Motor vehicles, fridges, television sets and furniture have traditionally been the dominant forms of collateral for individuals and small businesses.
The decline in these traditional forms of security coincided with banks reducing lending to households amid rising fears of defaults.
Data from the Central Bank of Kenya (CBK) shows that the value of personal and household loans fell to a three-year low of Sh943.84 billion in 2024, down from Sh1.082 trillion in 2023. The number of loan accounts in this category also dropped by 1.42 million to 10.72 million.
CBK data further reveals that this was the first reduction in household lending in seven years, as defaults in the sector increased to Sh100.97 billion from Sh92.03 billion the previous year.
Meanwhile, the BRS data shows a rise in alternative collateral types. The use of livestock and financial securities such as bonds and shares to secure loans surged 53.6 per cent to a combined 37,931 items in the year ended June 30, up from 24,694 a year earlier. The number of shares and bonds pledged more than doubled to 14,245 from 6,234, while livestock used as security rose to 23,686 from 18,460.
Livestock remains a popular collateral choice for households in rural areas, offering a convenient option for short-term loans, while shares and bonds are increasingly used by borrowers seeking financial security for their credit.
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