The results, two years on, from Kenya’s Movable Property Security Rights Act 2017

Photo Credit: Cowsoko

Movable property such as household goods, livestock and office equipment has helped add 183,487 loan accounts into the banking sector, a Kenya Bankers Association (KBA) report shows. […]

“The loans that flow out of the banking system on the basis of assets in the register has been growing. This shows that the alternative collateral has started picking up,” he said.

Two years after the movable assets bill was announced in Kenya some results have come our way. I covered the announcement and outlined some future areas of potential impact in a blogpost written in May 2017.

Household items are the most popular type of collateral with 198,873 items having being deposited with various banks since May 2017. KCB, KWFT, Equity and Co-operative Bank are the top banks in lending against these items.

This is followed by motor vehicle where borrowers have used 86,010 cars to get loans from banks and nonbank institutions.

Other popular accounts registered as movable assets collateral include furniture (84,626), equipment (71,396), livestock (27,785), stocks (25,000) and inventory with 19,010 entries in the Business Registration Service.

The Act also accommodates individuals working in the creative industry who can value their assets and obtain facilities against them. For instance, a musician can demonstrate to a bank that they have performance contracts lined up and is thus assured of cash flow to enable them to service the facility they seek.

At the moment, the results are numerical in nature, and the impact of this innovative loan facility has yet to be documented. But if this article is anything to go by, this has definitely had impact on the way banks perceive and serve their addressable target market. It should be noted that the article mentions a delay in the creation of the assets registry by a year, so the outcomes are actually quite healthy for such a short period of time for something wholly new to the banking sector.

Regular reports would be welcome, particularly from the rural areas, accompanied by narratives from the bank’s customers themselves. Still, its thrilling to hear about financial innovation in Kenya that doesn’t come attached to a mobile phone.

This entry was posted in Africa, African Consumer Market, Alternative currency, Banking, Biashara Economics, Business Models, Cattle, Consumer Behaviour, Economy, Flexibility, Livestock, Loans, Perspective, Prepaid Economy & Informal Sector, Rural Economy and tagged , , , , , , , . Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.

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