In a telling sign of Kenya’s economic challenges, TVs and refrigerators have overtaken cars as the most common collateral for short-term bank loans. This shift reveals the growing financial strain among Kenyan families struggling in the country’s softening economy.
According to the Business Registration Service (BRS), over 291,000 household items have been used to secure loans since July 2021, which is more than any other type of movable property. This information comes from the Movable Property Security Rights (MPSR) registry, which tracks assets used as loan securities.
“Lenders don’t have a problem with accepting household items because you will find they have receipts on big-ticket items such as television sets and fridges. They are movable and the lenders know where they can find them,” explained Shigadi Mwakio, Deputy Registrar of MPSR, in a recent Business Daily interview.
Motor vehicles fell to second place with 243,280 registered as loan collateral during the same period. Furniture, livestock, and equipment rounded out the top five most commonly used assets for securing loans.
Why This Matters
This trend coincides with recent surveys that show that more Kenyan households are borrowing money just to cover basic needs like food, healthcare, and rent. For five consecutive years, workers’ pay increases have trailed behind inflation, substantially reducing household purchasing power.
The economic situation worsened last year, with Kenya adding the fewest new jobs since the 2020 pandemic. The economy grew at just 4.7 percent (down from 5.7 percent the previous year), hampered by expensive credit, destructive floods, and disruptions from protests against the Finance Bill.
The Lending Landscape is Changing
Kenya’s 2017 Movable Property Security Rights Act created the legal framework allowing borrowers to use movable assets as collateral. This has opened doors for more borrowers while giving lenders greater confidence that they can recover loans in case of default.
“It’s a register for lenders, and by lenders that include shylocks. We do not lock anyone out, it could even be individuals acting as lenders,” Mwakio noted.
The registry has recorded over 626,000 initial notices between July 2021 and April 2025, with more than 116,000 searches conducted during the same period.
An interesting pattern has also emerged in which larger banks appear more comfortable accepting movable property as collateral compared to smaller financial institutions, which remain concerned about recovering these assets in cases of default.
The BRS is now working to convince banks to use the MPRS platform for financing new car purchases. Currently, banks fund vehicle purchases under asset financing arrangements where they register as co-owners with the NTSA.
Borrowing Patterns Are Also Changing
What’s most concerning is how loan purposes have shifted over the past five years. Where Kenyans once primarily borrowed to invest or purchase major assets like homes and land, loans are now increasingly funding day-to-day survival needs such as food, school fees, and rent.
This fundamental change in borrowing behavior, coupled with the rise in household items as loan collateral, paints a clear picture of the economic pressures facing ordinary Kenyans.
As a result, more and more people are paying attention to the Finance Bill 2025, which bears a lot of influence on how the economy will progress for the next 12 months.
