As Kenya navigates a turbulent economic landscape shaped by both domestic and global shocks, a quiet crisis is unfolding in people’s homes — the steady rise of household debt as millions live from hand to mouth.
In both urban and rural areas, families are increasingly relying on loans, formal and informal, not to invest but simply to survive. Debt levels have surged in recent years, driven by high inflation, mounting statutory deductions on payslips, struggling businesses, and stagnant wages.
The rising cost of education adds to the strain. In Nairobi, limited public school options push parents toward costly private schools, further squeezing household budgets.
Digital lending platforms, once hailed as a breakthrough for financial inclusion, are now part of the problem.
With minimal regulation and exorbitant interest rates, many borrowers are trapped in relentless debt cycles. Informal lenders – from chamas to shylocks—are exploiting the desperation, sometimes resorting to coercive tactics to recover money.
Alarmingly, 32.7 per cent of individual borrowers are taking new
loans just to repay existing debts—a clear sign of growing dependence on
credit to manage past obligations. This is a financial time bomb, and
policymakers cannot afford to ignore it.
