Demand for small loans is likely to go up ahead of Christmas and New Year festivities with full schools reopening in January further expected to provide a busy period for lenders.
Speaking to The Standard, the Chief executive of Jijenge Credit Peter Macharia said that the uptake that has been on the rise since the lifting of restriction measures in September, demand for loans will easily double the normal monthly uptake in the month of December all through to the first quarter of 2021. Read through;
“Ordinarily this is always a busy period and I expect that trend to carry on this year despite the raging impact of the coronavirus which pushed many Kenyans out of work,” said Macharia. Adding that, “It is a similar pattern we have seen since July when loans uptake significantly jumped as more businesses sought loans for operations after hurting from the pandemic.”
As a result, Macharia says industry players will be racing to fill financial gaps by offering loans quickly to those struggling financially as a result of the pandemic with more Kenyans still out of work and their ability to borrow is also limited.
Stress in the financial sector has soared since the coronavirus pandemic hit in March with about 70 percent of borrowers seeking a moratorium on loan repayments as their incomes dipped and savings were eroded.
The jump in the uptake of the loans emerged in a period when the economy shed more than two million jobs on the back of sluggish corporate earnings in the wake of Covid-19 economic hardships.
The unemployment rate increased sharply, approximately doubling to 10.4 per cent in the second quarter as measured by the Kenya National Bureau of Statistics (KNBS) Quarterly Labor Force Survey.
Kenya’s economy has been hit hard by COVID-19, severely affecting incomes and jobs.
A total of 604 firms in Kenya sent workers home due to the coronavirus fallout, according to the Federation of Kenya Employers (FKE) which said that at least 33 jobs were lost in every modern sector company between March and August 2020 – that number is expected to swell if recent estimates by the World Bank are anything to go by.
The Kenya National Bureau of Statistics estimated that around 1.7 million people had been made redundant due to the outbreak during this time, a figure that FKE had termed as ‘conservative.’
The World Bank last week warned that most employed Kenyans could soon lose their daily source of income as a majority of companies face a high risk of temporary or permanent closure and reduced revenues.
Kenyan labor force, particularly young people are disproportionately employed in restaurants, entertainment joints, tourism sectors which were largely shut down in March and remained closed through the three-month dry spell and beyond when the country went into a lockdown – with retail, another popular source of jobs for young people, also hit hard.
Macharia is however optimistic saying that despite the growing number of coronavirus cases not just locally but globally, things should be able to improve in the coming weeks perhaps months as more global pharmaceutical companies continue to announce discoveries of new vaccines with the potential to suppress the virus. Original copy