More than half of customers in Kenya remain confident in their ability to repay loans even as they report feeling the pinch of inflation “a little less” in first half (H1) of 2024.
At least 70 per cent of digital credit consumers feel confident in their ability to repay their loans as the economy crunches. This is according to the Half 1 2024 Customer Barometer data released by Tala, where they surveyed 2,637 correspondents across key markets.
Borrowing habits remained largely the same as the last half of 2023 with only 20 per cent reporting to have borrowed more in the first half of this year, with the average borrowed amount being between Sh10,000 and 20,000.
On inflation, the survey revealed that customers still feel the pinch of inflation, but it is less acute in the last 6 months with a twenty percent (20 per cent) drop from November 2023 to May 2024.
Despite relief at a high level, 80 per cent of Kenyans think food and groceries costs have increased in the last six months. 83 per cent said that their overall living expenses have increased in the first half of this year.
To cope with the high cost of living in H1 2024, 56 per cent of Kenyans cut back on expenses and reported that they are feeling the pinch a little less when it comes to cutting back, an indication of improved financial well-being compared to 2023.
51 per cent of respondents borrowed from digital credit providers to bridge income gaps, 31 per cent started side hustles, 20 per cent started their own businesses and 7 per cent borrowed from banks to cover their cash shortfalls.
“Looking at consumer credit trends defining the first half of this year, matters of economic equity come into sharp focus as quick access to funds can mean the difference between financial stability and hardship for many households,” stated Annstella Mumbi, General Manager, Tala.
In half one of 2024, education/school fees and school supplies remained the top reason why Kenyans borrowed. Other top reasons were; buying stock for an existing business, medical expenses, emergency expenses, starting a side hustle or a business.
“Today’s financial infrastructure doesn’t work for most of the world’s population, that is why we remain committed to applying advanced technology and human creativity to solve what legacy institutions can’t or won’t. We not only enable our customers to survive this period but also empower more people to unleash their economic power,” she said.
