Over one-third of Kenyans have increased their borrowing amid rising living costs and delays in income. Traditional expenditure reduction methods are declining, as more individuals favor loans for sustenance. Business ownership aspirations remain high, but financial challenges persist, affecting overall financial well-being.
In Kenya, over one-third of the population has increased their borrowing due to rising living costs and income delays. Traditionally, Kenyans coped with economic hardships by cutting non-essential expenditures, but a shift is observable. A recent report by digital lender Tala reveals that households are increasingly relying on loans instead of cutting back, as options for further expenditure reductions become exhausted.
The Tala report indicates a decline in the traditional practice of reducing spending. The percentage of respondents intending to cut expenditures has dropped from 72% last year to 59% this year. Conversely, the number of individuals favoring increased borrowing rose significantly, from 27% to 46%. Additionally, those pursuing new business endeavors as a coping mechanism increased from 34% to 51%.
Teddy Kahiro, research manager at Tala, noted that the high cost of living has constrained options for Kenyans, prompting a reconsideration of borrowing. The data indicates that business expenses, education, and everyday living costs drive borrowing, with 80% of borrowers expressing confidence in repayment.
Annstella Mumbi, Tala’s general manager, highlighted the financial aspirations of Kenyans, with business and home ownership ranking as primary goals over the next five years. Furthermore, many respondents are setting aside 11 to 20% of their income for investments, driven by the desire to accumulate wealth and retire comfortably.
The report points to increased business ownership, which has grown by 7% in 2025, contrasted with a 5% decline in full-time employment. Moreover, the participation in secondary income-generating activities has diminished due to financial constraints. Despite these challenges, approximately 46% of Kenyans maintain a positive outlook regarding their financial futures.
In summary, borrowing has become a vital necessity for many Kenyans facing financial pressure due to the increased cost of living. While there is a noted shift in financial behaviour, Kenyans continue to demonstrate resilience and optimism for their financial trajectories.
The analysis presents a concerning trend in Kenya, wherein borrowing is increasingly viewed as a necessity due to rising living costs and delayed incomes. While traditional methods of financial coping are receding, individuals are displaying resilience in their financial aspirations and investing habits. The findings suggest an urgent need for financial literacy and support mechanisms to enable sustainable borrowing practices.
Original Source: eastleighvoice.co.ke
