With Kenyan banks yet to fully embrace unsecured loans, Kenyans are left with no other option but to deposit collateral in order to acquire loans in their quest to grow their businesses or for their personal use.
Quoting the Business Registration Service, the 2019 Kenya Bankers Association (KBA) Shared Value Report has revealed the different types of collateral that Kenyans have deposited with banks since May 2017 while also detailing the frequency at which they trade a particular type of wealth for a loan.
Vehicles are the most popular type of collateral with 86,010 logbooks having being deposited with various banks across the country as collateral during the period under review.
Furniture (84,626), Equipment (71,396), Livestock (27,785), Stocks (25,000) and Inventory (19,010) feature highly in the list of types of wealth that banks are holding onto after advancing loans to Kenyans.
Bank accounts (6409), Immovable property (5262), Securities (4207), Acquired property (3226), Crop farms (2013), Documents tittle (479), Consumer goods (455), Intellectual property (364), Household items (198.87) and Negotiable instruments (97) complete the set of the other types of collateral that Kenyans have deposited with banks.
The report also shows that with credit being scarce, Kenyans are forced to deposit multiple collateral in order to acquire the funds.
For instance, Kenyans are forced to deposit at least four valuable household items before acquiring a loan from a bank.
The report also shows Equity Bank as being the lender which is most open to lending to persons clutching on collateral with the financial institution featuring among the top four 12 out of 17 times in the list of top users in the different collateral segments.
Kenya Commercial Bank (KCB) features in 7 out of the 17 collateral segments.
Latest data by the Financial Sector Deepening (FSD) shows that, as of the end of January 2019 there were 183,487 loans registered on the Moveable Assets Registry worth Ksh3.56 trillion.