A recent report highlights a significant increase in borrowing among Kenyans due to rising living costs. Traditional expenditure cuts have declined, with many opting for loans to sustain their livelihoods. The trend reflects changing financial strategies, as optimism remains despite economic pressures.
Recent data indicates that over one-third of Kenyans are increasing their borrowing due to the escalating cost of living and delayed incomes. Traditionally, Kenyans would mitigate financial strain by cutting down on unnecessary expenditures, but this coping mechanism is evolving as reported in the Money March report by digital lender Tala.
The report indicates that as household budgets become more strained, many individuals are increasingly resorting to loans to sustain their living standards. The inclination to borrow is growing, overshadowing traditional expenditure cuts; only 59% of respondents plan to reduce spending this year, down from 72% last year. In contrast, those opting to borrow more has surged from 27% to 46%.
Additionally, individuals launching new businesses as a financial strategy has risen from 34% to 51%. Teddy Kahiro from Tala highlights that the unforgiving cost of living leaves little room for reductions in expenses, raising questions about the necessity of borrowing in today’s economy.
More than one-third of Kenyans have reportedly increased borrowing, primarily for business expenses, education, and basic living needs, with 80% expressing confidence in repaying loans. According to Annstella Mumbi of Tala-Kenya, financial aspirations include business and home ownership over the next five years.
Many respondents are saving between 11% to 20% of their incomes for investments, driven by goals related to wealth growth, business expansion, and retirement preparation. However, challenges such as fear of losses and distrust in investment platforms hinder greater financial commitment.
The report suggests that business ownership has grown by 7% in 2025, while reliance on full-time employment for primary income has decreased by 5%. Additionally, both full-time and part-time workers are pursuing fewer secondary income opportunities as living expenses rise.
Despite the heightened financial strain—evidenced by 90% of respondents encountering challenges and 32% feeling stressed—optimism about financial futures remains resilient, with 46% of those surveyed feeling positive about what lies ahead.
The shift in borrowing practices among Kenyans illustrates an urgent response to escalating living costs and economic pressure. As traditional coping mechanisms diminish, loans have become essential for maintaining livelihoods. Despite the challenges faced, many Kenyans remain hopeful about their financial futures and are proactively seeking to invest in their financial well-being through education and business ventures.
Original Source: eastleighvoice.co.ke
