As living costs surge in Kenya, a growing number of citizens are turning to borrowing as a necessity rather than an option. A recent report reveals a decline in traditional cost-cutting measures and an increase in loan uptake to manage daily expenses. Despite financial strains, optimism about the future remains prevalent among the populace.
Recent surveys reveal that over one-third of Kenyans are increasing their borrowing amidst escalating living costs and income delays. Traditionally, Kenyans would reduce non-essential expenditures during economic hardships, but recent findings indicate a notable shift towards borrowing as a coping mechanism.
A Money March report by digital lender Tala highlights that as household budgets face pressure, many individuals now rely on loans for their basic needs, with minimal opportunity to cut expenses further. The report notes a decrease in the traditional strategy of reducing spending, dropping from 72% to 59% this year, while the number of people opting to borrow increased from 27% last year to 46% this year.
Additionally, those considering entrepreneurship as a solution to financial struggles grew from 34% to 51%. Teddy Kahiro, Tala’s research manager, questioned whether borrowing is turning into a necessity given the persistently high costs.
General manager Annstella Mumbi observed that the primary reasons for borrowing include business expenses, education, and daily living needs, with nearly 80% of borrowers optimistic about repayment. Respondents expressed aspirations for business and home ownership over the next five years, reflecting an intention to invest 11 to 20% of their income in savings and other forms of wealth growth.
Despite these financial challenges, fear of investment loss and distrust in platforms hinder saving efforts. The report also notes a 7% rise in business ownership while traditional employment as a main income source contracted by 5%. Additionally, both full-time and part-time workers have slightly reduced secondary income ventures due to constraints imposed by rising living costs.
Almost 90% of those surveyed reported facing financial difficulties within the last six months, with 32% feeling stressed by their situations. Yet, akin to previous years, a sense of optimism remains, as 46% of respondents expressed a positive outlook for their financial futures, highlighting the resilience of the Kenyan population.
In conclusion, borrowing is rapidly becoming an essential strategy for many Kenyans in response to rising living costs and economic constraints. Traditional coping mechanisms are declining, with more individuals turning to loans for daily necessities. Despite financial challenges, expressions of optimism regarding future stability illustrate the resilience within Kenyan society. This evolving trend reflects significant shifts in behaviors and coping strategies amidst ongoing economic pressures.
Original Source: eastleighvoice.co.ke
