In Kenya, over one-third of the population is increasingly borrowing due to rising living costs and delays in income, signaling a shift from traditional expenditure reduction to loan reliance. The Tala Money March report indicates that confidence in borrowing and entrepreneurship is growing despite financial challenges, with many seeking to secure their financial futures.

Recent data reveals that slightly over one-third of Kenyans have increased their borrowing, primarily driven by the rising cost of living and delays in income. Traditionally, during economic hardships, Kenyans have managed their finances by cutting back on non-essential expenditures. However, a substantial shift is occurring, as many individuals are now opting for loans to maintain their livelihoods amid persistent financial pressures.

According to the latest Money March report by Tala, the trend of reducing expenditures seems to be declining. The report indicates that only 59 percent of respondents plan to cut down on expenses this year, compared to 72 percent the previous year, marking a 13 percent decrease. Notably, the inclination towards borrowing has surged by 19 percent, with individuals opting for loans increasing from 27 percent last year to 46 percent this year.

Moreover, the report highlights a rising interest in entrepreneurship as a coping mechanism, with participants starting new businesses increasing from 34 percent to 51 percent. Teddy Kahiro, research manager at Tala, emphasizes that the high cost of living indicates minimal options left for cutbacks, leading many Kenyans to question their reliance on borrowing.

A general observation across the report shows that business expenses, education, and daily living needs are the primary reasons for borrowing. Approximately 80 percent of borrowers express confidence in their ability to repay. Respondents have also indicated aspirations for business ownership and home ownership as key financial goals over the next five years.

Additionally, many respondents are investing 11 to 20 percent of their income in savings and cooperative societies, driven by objectives such as wealth growth and business expansion. Despite this, concerns about potential losses and distrust in investment platforms hinder greater saving and investment activities.

The report further indicates that ownership of businesses has increased by seven percent in 2025, while traditional employment as the primary income source has diminished by five percent. Furthermore, economic pressures have deterred Kenyans from pursuing supplementary income ventures, resulting in a notable decline in engagement with side hustles.

Despite the ongoing financial challenges faced by 90 percent of those surveyed and the stress experienced by 32 percent, there remains an optimistic outlook on personal financial futures, with 46 percent of individuals expressing positive feelings about their financial prospects.

In summary, the rising cost of living in Kenya has compelled more individuals to resort to borrowing as a necessity rather than an option. The shift in financial management strategies highlights a significant increase in borrowing, with the focus now on sustaining livelihoods in a challenging economic environment. Although Kenyans face financial challenges, a sense of resilience and optimism regarding their financial futures persists among them.

Original Source: eastleighvoice.co.ke