This archive report was first published on 10 July 2020.
As the economic impact of the coronavirus pandemic continues to bite, ride-hailing drivers in Kenya are facing a new challenge: repossession of their vehicles. Stanbic Bank has listed 72 vehicles, including 31 Suzuki Altos belonging to Uber ChapChap drivers, for auction due to defaulted loan repayments.
The drivers, who operate on ride-hailing platforms like Uber, Taxify, and Little, are facing financial difficulties due to the economic impact of the pandemic. The government's introduction of movement restrictions in March to stop the spread of the virus has severely impacted their earnings.
Stanbic Bank entered a partnership with Uber and CMC Motors in 2018 to provide drivers with low-cost vehicles at 14% interest payable over three years. However, the bank has restructured some facilities due to the pandemic, and some drivers have defaulted on their payments.
“Due to the impact of Covid-19, our Vehicle and Asset Financing unit has supported the restructures to more than 460 vehicle owners worth approximately Sh1 billion,” said Stanbic Bank in a statement.
David Muteru, chairman of the Digital Taxi Association of Kenya, said ride-hailing drivers are facing auctions for losing incomes owing to stay-at-home orders that have been in place over the last three months.
“While other people could stay at home, taxi drivers could not,” he explained. “Saccos and microfinance institutions had given us three months. Once that grace period lapsed, they came for the vehicles,” he said.
According to a report released by the Kenya Bankers Association (KBA), 95% of lenders expect Covid-19 to have adverse effects on Non-Performing Loans. Trade, manufacturing, and household sectors are expected to account for the majority of bad loans.
