At least 15 counties are facing debt distress, a report released by FinAccess Household Survey, County Perspective shows.
This is attributed to the climate-related shock of drought, which has reduced the ability of borrowers to repay their loans.
In the survey, Marsabit county leads with the number of loan defaulters at 73.7 per cent, followed by Garissa at (58.5) and Samburu (58.3).
Busia, Nandi and Siaya recorded the lowest incidence of loan defaults all recording below five percent among adult population of reported loan defaults.
Busia recorded 3.8 per cent, Nandi (4.1) while Siaya has (4.1) of loan defaulters.
The report presents indicators that reflect the quality of financial services and products used at the county level.
This includes consumers level of awareness about available financial services and products in meeting their needs, debt distress at household level, sources of financial advice and challenges consumers face in usage of different products and services.
This is according to the latest survey released by the Central Bank of Kenya, the Kenya National Bureau of Statistics and the Financial Sector Deepening Kenya last week.
The report provides a synopsis of statistics that reflect similarities and disparities in the level of financial inclusion at county level, that would otherwise have been masked by the national averages.
"This is important for policy makers, private sector players, researchers, development partners, among other stakeholders, in terms of identifying challenges and opportunities regarding provision of or access to formal financial services across the 47 counties," the report read.
FinAccess Household Survey also says the findings provide useful policy lessons to county governments as well as the national government in terms of instituting measures towards attaining inclusive and equitable growth.
In September, President William Ruto announced that at least four million Kenyans will be opted out of the Credit Reference Bureau listing.
"I am very happy that between four to five million Kenyans will be out of CRB blacklist by the beginning of November," he said.
"Four million Kenyans have been excluded from any formal borrowing because of blacklisting. They have been left at the mercy of shylocks."
CBK began reviewing the current credit reference framework in line with a presidential directive, which seeks to open up the credit market by allowing defaulters to access loans.
CBK stated that it is further working with CRBs to align their credit scoring models to best practices, for purposes of enhancing the quality of their credit reports.
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