NAIROBI, Kenya- As Kenyans navigate a challenging economic landscape, a new survey by digital credit provider Tala reveals how borrowers are prioritizing their loans.
The Customers Barometer Survey for the first half of 2024 shows a significant trend: education tops the list of loan purposes, with 46pc of respondents using their credit to cover school fees and supplies.
In a country where access to quality education often requires financial assistance, it’s no surprise that nearly half of Tala borrowers channel their loans into education.
But it’s not just education that’s driving borrowing. Close behind, 44pc of respondents reported using their loans to restock or purchase supplies for their businesses, highlighting the critical role of microcredit in sustaining small enterprises.
This trend is particularly significant in a year marked by inflationary pressures that have driven up the cost of basic goods and services.
With the rising cost of living, 26pc of borrowers found themselves using loans to meet everyday needs like food, clothing, and rent. Meanwhile, 20pc turned to Tala for medical expenses, and 19pc relied on their loans for emergency situations.
The impact of inflation is clear in the survey, with 56pc of respondents admitting they’ve had to cut back on expenses to make ends meet.
Many are turning to digital credit to bridge income gaps—51pc have borrowed from platforms like Tala, while others have sought alternative income sources through side hustles (31pc) or by starting their own businesses (20pc).
“Economic equity is at the forefront as quick access to funds can mean the difference between financial stability and hardship for many households,” said Annstella Mumbi, General Manager at Tala.
Despite the financial strain, there’s a notable confidence among Kenyans in managing their loans. According to the survey, 80pc of respondents feel assured in their ability to handle their debt, even as living expenses soar.
Over the last six months, 40pc reported a sharp increase in their living costs, particularly in food, utilities, and transport.
Yet, the average loan sizes—ranging from Ksh 10,000 to Ksh 50,000—reflect a calculated approach to borrowing, tailored to meet specific needs.
Tala’s survey, conducted across Kenya, Mexico, the Philippines, and India with 2,637 respondents, highlights the global challenge of accessing financial services that work for everyone.
As Mumbi put it, “Today’s financial infrastructure doesn’t work for most of the world’s population, which is why we remain committed to using advanced technology to solve what legacy institutions can’t or won’t.”
