This archive report was first published on 3 July 2019.
Kenya's Movable Property Security Rights Act 2017 has revolutionized the banking sector by allowing lenders to diversify collateral beyond traditional immovable assets.
According to the Kenya Bankers Association (KBA), the law has added 183,487 loan accounts to the banking sector, with top lenders such as KCB, Equity, and Co-operative Bank embracing the idea.
"The loans that flow out of the banking system on the basis of assets in the register have been growing. This shows that the alternative collateral has started picking up," said Habil Olaka, KBA chief executive.
Household items top the list of collateral registered, with 198,873 items deposited with various banks since May 2017. Motor vehicles, furniture, equipment, livestock, stocks, and inventory are also popular types of collateral.
The electronic registry, which is expected to be ready by June next year, will allow tracking of goods used to secure bank loans or collateral. The World Bank has committed $240,000 to raise awareness among customers, banks, and other stakeholders for early adoption of the electronic registry.
Published on July 3, 2019, the law aims to increase access to credit for individual consumers, micro, small, and medium enterprises, especially women entrepreneurs who are adversely affected by traditional lending practices.
