Nairobi — Seven in 10 Kenyan (70 percent) digital credit borrowers will be able to repay their loans in time despite tough economic challenges, a new report shows.
The latest customer barometer survey by Tala, however, reveals that borrowing habits remained unchanged in the last half of 2023, with only 20 percent reporting to have borrowed more in the first half of this year, with the average amount being between Sh10,000 and Sh20,000.
Nonetheless, customers still continue to feel the pinch of high cost of living, but with decreased severity.
As per the report, 80 percent of Kenyans think that food and groceries costs have increased in the last six months, with 83 percent believing that their overall living expenses have shot up in the first half of this year.
To cope with the high cost of living in H1 2024, 56 percent of Kenyans cut back on expenses and reported that they are feeling the pinch a little less when it comes to cutting back, an indication of improved financial well-being compared to 2023.
51 percent of respondents borrowed from digital credit providers to bridge income gaps, 31 percent started side hustles, 20 percent started their own businesses, and 7 percent borrowed from banks to cover their cash shortfalls.
"Looking at consumer credit trends defining the first half of this year, matters of economic equity come into sharp focus as quick access to funds can mean the difference between financial stability and hardship for many households," said Annstella Mumbi, General Manager, Tala.
In half one of 2024, education/school fees and school supplies remained the top reasons why Kenyans borrowed.
Other top reasons were buying stock for an existing business, medical expenses, emergency expenses, starting a side hustle, or starting a business.
"Today's financial infrastructure doesn't work for most of the world's population, that is why we remain committed to applying advanced technology and human creativity to solve what legacy institutions can't or won't. We not only enable our customers to survive this period but also empower more people to unleash their economic power," Mumbi added.
