Debt trap: Ensnared by loans, women turn to suicide as escape

Debt is driving Kenyan women over the edge. Photo | Photosearch

What you need to know:

Loans are pushing a large number of women into a trap far deeper than the financial mess they were already in. Hounded and humiliated by recovery agents a number are dying by suicide

“I earn Sh56,000 net salary and have a bank loan that deducts Sh25,000 per month. My expenses are too much.  When the bank deducts at the end of the month, I top up the loan to run for another three months. This has become my cycle. Sometimes I borrow money from friends and family. I am just really tired of always paying this loan. Help!” writes Esther a personal assistant and a single mother of three.


“I have a car loan of Sh700,000. This loan is in default and needs to be cleared or the car will get repossessed in two months.  My bank is willing to give me a loan of Sh1.2 million but I can't access it as I am listed on CRB with loans amounting to Sh200,000 that I have defaulted on. I feel like I am losing my mind. What should I do?”, asks Joyce.

“My name is Jedidah. I am a teacher earning Sh45,000 net. Due to Sacco loans, I only take home Sh22,000. I spend all of it paying rent, transport and food. I have debts of about Sh450,000. I can’t account for any of the Sacco loans I took. I also haven’t repaid Sh15,000 mobile loans. My reckless spending habits are drowning me. I need help.”

These are a few of the many SOS distress calls we received from Kenyan women who are drowning in debt. A Saturday Magazine analysis from its personal finance section shows that up to 90 per cent of questions received from Kenyan women are on how to cope and get out of debt. The most common debts are taken to fund lifestyles, like purchasing luxury household items, entertainment, beauty and vehicles.

Lured by easily accessible loans from diverse sources ranging from mobile loans, Chama loans, table banking, micro-finance lenders, shylocks, SACCOs and banks, many keen on upgrading their life, are finding themselves trapped.

Pushed to suicide

This easy money lures many in times of distress. But the debt is pushing a large number of people into a trap far worse than the financial situation they are already in. Hounded and humiliated by recovery agents a number are dying by suicide.  

Such is the case of Elizabeth Mumbua who died in November last year while undergoing treatment at a Machakos Hospital. The mother of two had fled her home and taken poison over Sh300,000 she had taken from a table banking group where she was the treasurer.

In July 2022, a primary school teacher died by suicide in Kandongu village in Kirinyaga County.  Wangithi Karuria, 56, left a suicide note in which she explained that she had taken her life due to huge debts which she was unable to repay. “She revealed that she had a lot of debt which should be cleared by her two sons,” Mwea West Sub County police boss Wilson Koskei revealed.

Earlier in 2022, 43-year-old Victorine Akinyi committed suicide near her home at Migoko village, Kachola Sub Location over a Sh30,000 loan that she was unable to repay.

These unfortunate incidents paint the gloomy picture of women who have been pushed to the edge and tipped over because of loans. Loans have become a common denominator in a majority of cases of depression, with many unreported cases having the same unfortunate ending.

The Kenya National Commission on Human Rights (KNCHR) shows that only a fraction of suicide cases are reported. KNCHR data shows that 1,442 Kenyans attempted suicide between 2015 and 2018. Out of the 421 suicide cases in 2017, 91 were women.

Capitalist lifestyle

Conspicuous consumption is one of the trends that is blamed for the rise in people crippled by debt. According to Thorstein Veblen’s theory, between a global market for counterfeit goods and many people taking on debt to afford luxuries, conspicuous consumption is widespread in our society today. Veblen’s “The Theory of the Leisure Class” speculates that a leisure class, or upper and middle classes, is rooted in capitalism and the purchases are meant to impress others.

Take Mary for example.  She is servicing a loan she cannot account for. “I am servicing two major loans; a Helb one and a bank loan of Sh1.2 million. The bank loan was to finance my Masters but I got stuck at the research proposal. I squandered the remainder of the money by buying household electronics and doing a few things for my folks,” Mary says.

Mary is not alone. Connie Omutanyi took a Sh800,000 loan using her payslip for her husband and neither she nor her husband can account for it. “I am stuck with a four-year loan that eats Sh26,000 from my pay slip every month. It was supposed to be startup funds, but we wasted all of it,” she says. Connie says that when the loan hit her bank account in December 2021, they took a holiday to Zanzibar with their two children. It was their first family holiday together. “We booked flights to Zanzibar in a moment of ‘kujirudishia shukrani’,” she says. By February 2022, they had consumed half of the loan. “We went on holiday, upgraded our family furniture, and repainted our parents’ homes,” says Connie who is a secondary school teacher.

When the money started running thin, they leased a farm for one year in Baringo to farm tomatoes. “We bought equipment for pumping and spraying pesticides. It seemed like a good idea until the investment yielded slightly over a quarter of the Sh300,000 loan balance,” she says. 

Connie is distressed. “There is really nothing to smile about when my payslip ends with a net of less than Sh15,000,” she says.

Financial literacy

Lack of financial literacy has also pushed some women to the brink when they acquire loans from rogue micro lenders and shylocks who promise to process loans within hours. In 2020, Cate Mumbi took an Sh90,000 loan from a shylock. She secured it with her Mazda Demio which was valued at Sh450,000. “The loan was for a year. I was supposed to pay Sh12,500 per month. I defaulted twice and paid late once. By the time I completed the loan, I had paid Sh360,000. I was slapped with heavy fines and penalties for breach of repayment terms and conditions,” she says.

Despite the known risks, desperate women keep trooping into bad debts. Why is this? According to psychologist Ken Munyua, the appetite for debt has become insatiable in tandem with the current world that is highly competitive in setting standards and class.

More women are today willing and ready to do anything to please. Munyua says that this includes raking in debt to fit in with the latest trends in society, and to appear trendy within their Chamas.

“If a woman is member of a Chama that contributes Sh10,000 every month to visit in-laws, she would rather take a loan to honour her contribution and buy the latest kitenge than suffer the embarrassment,” says Munyua.

He also says that the availability of loans has made it easier for people to take credit. “A few years ago, taking loans was a very tedious process. You needed to go through the bank, filing a bunch of papers and security. Chances of approval were very low too,” he says. Today, it is possible to get weekly, monthly and quarterly loans on mobile phones.

Hustler appetite

Take the Hustlers Fund that was launched on November 30, 2022. According to an analysis by data analyst Ezekiel Samuel, 17.7 million Kenyans had enrolled for the fund as of January 4, 2023. These Kenyans had taken Sh12.8 billion with 58.7 percent of the loans unpaid. In the six months to June 2022, rival platform Fuliza had Kenyans take Sh288 billion. This was equivalent to Sh1.57 billion daily borrowing between January and June. This came amidst an increase in the prices of goods and services meaning that many people were utilising the service to cover their budget.

The drastic rise in the cost of living has pushed many into debt. Between June and July 2022, the cost of living measure rose from 7.9 percent to 8.3 percent.

This resonates with the situation Scolastica Kokie has been in since mid-last year. “Life has become depressingly expensive. I survive each day on loans because the salary I earn is not enough,” she says.

“I have mobile loans, loans from a chama, debts at several shops, and I owe friends and family.” Kokie earns Sh18,000 from her job as a cleaner for a Nairobi-based corporate cleaning business.

“My life would come to an end if they shut down mobile loans,” she says. Kokie says that she has mastered the art of borrowing Fuliza to pay M-Shwari and borrowing Timiza to pay Equitel.

Although she has managed to keep her head above the water, Kokie admits that she is not sure how long she can keep up. “I seem to have everything under control, but in reality I am walking on thin ice. It is distressing and emotionally depressing to be a queen of debts,” says the 28-year-old single mother.

A survey by Financial Sector Deepening Kenya (FSD) says most women use mobile loans to settle bills like electricity, shopping or even to treat their family or friends. Studies show that 60 per cent of women use their savings to repay loans, with five per cent of them foregoing paying medical expenses to live the 'Instagram life'.

Economic and financial analyst Geoffrey Gitau says that most borrowers don’t understand the impact and mental toll of paying their loan over nearly seven years and at an extra cost. “The mentality of showing off has superseded the risk of repercussions. People are now more willing to do anything to fast-track lifestyles; for example, acquiring a big vehicle to appear rich,” he says.

This is echoed by psychologist Agatha Mumo, the founder and Lead Psychologist at Arcadian Counseling Centre. According to Mumo, there is rising peer pressure even among adults, especially on social media. Women post photos living a posh lifestyle and this makes their peers want to conform. “With the pressure to conform, they start living beyond their means,” she says.

Mumo also says that borrowing to satisfy an internal emotion can also become an addiction. “The addiction will keep asking for more to satisfy it, you might find yourself always borrowing to consume.”

Debt is driving Kenyan women over the edge. Photo | Photosearch


Coping with debt

According to economic and financial expert Geoffrey Gitau:

·         Understand how debt works and separate good from bad debt. Good debt has the potential to increase your net worth while bad debt involves borrowing money to purchase depreciating assets or consumption. Loans taken to buy furniture or fund consumerism are bad debts. Furniture may be good looking at your house but it will never appreciate in value.

·         Restructure your loans: Restructuring your personal loans does not mean going for a moratorium at the bank. It means consolidating your payments so that you don’t have money getting deducted all over.

·         Consolidation: Whereas it is possible for your lender to consolidate all your debt, you must be cautious about the terms, rates and the actual total cost of credit and consolidation you will incur.

·         Avoid shylocks: Informal lenders offer very exorbitant rates and severe terms and conditions that will easily cost you your security. If you need financing, go the traditional banking route. If you don’t qualify for a loan, it is because you can’t afford it. Don’t run to shylocks as an alternative.

·         Strive to get out of mobile loans: Mobile loans and credit cards may seem affordable at face value, but they are some of the most expensive debts you could incur.

·         Target the principal: Accelerate payments on the actual amount you borrowed known as the principal.

How to beat debt depression

·         Ripple effect: According to Gitau it is not the debt that will push one into death by suicide. It is the ripple effects that come with repayments and non-repayments, lower spending power and reduced quality of life.

·         Fighting fire with fire: Agatha says that if you have debt depression, taking additional debt to remedy the situation isn’t ideal. Once you have debt depression, your situation ceases to be financial and becomes medical.

·         Treatment: Medical treatment for debt depression will be through psychotherapy and psychiatric interventions. Agatha recommends professional personal finance intervention, psychotherapy, psychiatric review and social support as the best strategy for coping.

The debt problem in Kenya

Data from the Central Bank of Kenya (CBK) shows that Kenyans have been collecting debts in huge volumes over the past few years:

·         Credit growth to the consumer durables segment, which includes goods such as home electronics, computers, jewelry, vehicles and furniture expanded by annualised rate of 16.5 percent in October 2021.

·         As of March 2022, car and homeowners were among borrowers with the worst loans default in 2021.

·         Defaulted loans rose by Sh30.6 billion in June 2022 to Sh514.4 billion.

·         The share of non-performing loans hit a high of 14.7 percent in June 2022. This was a higher ratio than the 14.55 percent recorded in March 2021 when Kenya was battling Covid-19 economic hardships.

·         The ratio of gross non-performing loans (NPLs) to gross loans stood at 14.2 percent in August 2022.