A recent report indicates that over one-third of Kenyans have increased borrowing due to high living costs and delayed incomes. Traditional methods of reducing expenditures are declining, while reliance on loans has grown significantly. Many Kenyans express confidence in their ability to repay borrowed amounts and remain optimistic about their financial futures despite prevailing challenges.
In Kenya, over one-third of the population has increased their borrowing habits, driven by escalating living expenses and delayed income payments. Traditionally, during economic downturns, Kenyans would reduce their expenditures, particularly on non-essential items. However, the latest findings from Tala’s Money March report indicate a significant paradigm shift in consumer behavior as borrowing becomes an essential means of sustaining livelihoods.
As household budgets come under strain due to rising costs, many individuals are neglecting the potential risks associated with borrowing. The report revealed a notable decline in the traditional approach of cutting expenditures; only 59 percent of respondents indicated they would reduce spending this year, down from 72 percent last year. In contrast, those opting for increased borrowing to cope with economic hardships surged from 27 percent to 46 percent, representing a 19 percent increase.
Furthermore, the share of individuals starting new businesses as a coping mechanism rose from 34 percent last year to 51 percent this year. Teddy Kahiro, the research manager at Tala, emphasized that Kenyans’ persistent high living costs have left them with little room for further reduction in expenses. He raised the critical question of whether borrowing has become a necessary strategy for many Kenyans.
The report indicates that slightly more than one-third of Kenyans are borrowing more due to economic pressures. Annstella Mumbi, general manager of Tala-Kenya, highlighted that key reasons for borrowing include business expenses, education, and daily living needs, with approximately 80 percent of borrowers expressing confidence in repaying their loans. Looking ahead, many respondents identified business and homeownership as their primary financial aspirations for the next five years.
Moreover, a significant percentage of individuals are allocating between 11 to 20 percent of their income for investments, driven by goals such as wealth accumulation and business growth. However, concerns regarding investment risks and mistrust in financial platforms hinder further saving and investing efforts. The report also reveals a 7 percent increase in business ownership since 2025 while full-time employment as a primary income source has declined by 5 percent.
The trend reveals that Kenyans pursuing secondary income-generating ventures have diminished as rising costs limit available funds for side hustles. Despite these challenges, there remains a resilient sentiment among Kenyans regarding their financial futures, with 46 percent of respondents expressing optimism this year, even as 32 percent continue to experience financial stress.
This juxtaposition of financial hardship and optimism reflects the enduring spirit of Kenyans, even amidst persistent economic challenges.
In conclusion, the financial landscape for many Kenyans is characterized by increased borrowing due to rising living costs and shrinking disposable incomes. Borrowing has transitioned from a choice to a perceived necessity, with many individuals now relying on loans to meet essential needs. Although economic pressures persist, there remains a degree of optimism among Kenyans regarding their financial futures, demonstrating resilience in the face of adversity.
Original Source: eastleighvoice.co.ke
