A Tala report reveals that over one-third of Kenyans are increasingly borrowing due to rising living costs and stagnant incomes. Traditional methods of reducing expenditures are declining, with more individuals relying on loans as a coping strategy. While financial challenges persist, many respondents express optimism about their future financial situations.
Due to escalating living costs and income delays, over one-third of Kenyans are increasingly resorting to borrowing. Traditionally, during hard economic times, Kenyans would manage by cutting down on non-essential expenses. However, recent findings from Tala’s Money March report indicate a significant shift towards borrowing to sustain livelihoods, as there is little left to reduce in household budgets.
The recent rise in living costs has reportedly pressured individuals to take on loans rather than reduce spending; the number of people willing to cut expenditures has decreased from 72 percent last year to 59 percent this year. Conversely, those opting to take more loans rose from 27 percent to 46 percent, indicating a growing reliance on borrowing as a financial strategy.
The Tala report indicates that business expenses, education, and daily needs are the leading reasons for increased borrowing. Furthermore, approximately 80 percent of borrowers expressed confidence in repaying their loans, with hopes of owning homes and businesses in the next five years. Additionally, many respondents are allocating between 11 to 20 percent of their income towards investments, primarily in savings and cooperative societies.
Despite a slight uptick in business ownership, full-time employment has seen a decline year-on-year. Moreover, fewer Kenyans are investing funds into secondary income opportunities due to the financial strains of rising living costs. Notably, 90 percent of those surveyed reported facing financial challenges, yet 46 percent retained a positive outlook on their financial futures, indicating resilience among the population.
The rising necessity for borrowing among Kenyans, as seen in the Tala report, reflects a broader trend driven by increasing living costs and stagnant incomes. While traditional coping mechanisms are declining, the shift towards loans signifies a critical survival strategy for many households. Despite challenges, Kenyans remain optimistic about their financial futures, showcasing resilience in the face of economic adversity.
Original Source: eastleighvoice.co.ke
