Tala MoneyMarch2023 Report: Appetite for Digital Credit Surges As inflation Pushes Kenyans to Borrow More
Compared to 2022, incidences of those using more than three digital lenders have increased, while 4 in every 10 consumers (42%) remain loyal to one digital lender.
Nairobi, Kenya, Monday 13th March 2023 – Half of Kenyan consumers are borrowing more compared to six months ago with incidences of those using more than three digital lenders on the rise. According to Tala’s 2023 MoneyMarch “State of the Economy” report, this is attributed to fewer full-time jobs and declined alternative sources of income forcing consumers to borrow in order to pay for living expenses in the face of growing inflation.
Borrowing for business purposes remained the top reason for taking a loan as 67% of respondents indicated that they borrowed to meet business expenses and add stock. Compared to 2022, this was a slight drop from last year’s 78% as Kenyans shift focus to meeting basic needs such as school fees, utility bills, medical care, rent and public transport amid soaring cost of living.
“Compared to 2022, Kenyans are cutting down on spending and saving more in a bid to curb the impact of increasing inflation in their daily lives. More generally, we are also seeing Kenyans borrowing more, and it is fascinating to note that over the last six months consumers have channeled more of their loans to their savings such as ‘Chama’ contributions. It appears that customers are borrowing from digital lenders to help keep pace with their group contributions, underlying the need for access to affordable credit for continued financial independence during challenging economic times ” said Teddy Kahiro, Senior User Research manager at Tala while presenting findings to media and industry stakeholders.
While speaking on spending habits, Teddy said that the report presented a unique perspective on what respondents were spending on. They revealed that they spent 25% of their earnings in savings with chamas, saccos or fixed deposit accounts, 22% on personal expenses, 23% on utility bills and a distant 15% on emergencies.
On financial literacy, over half of surveyed customers who said that they were experiencing increased expenditures over the last six months, want more guidance on creating a budget to manage expenses. “This is a contrast from last year where consumers wanted guidance on how to start/grow businesses and save effectively” noted Mr. Kahiro. “The hypothesis here could be that people are holding onto money rather than investing it in a new business amidst the ongoing economic crunch” concluded Teddy.
“Empowering our customers with education on how to manage their finances has always been a key objective for Tala. We believe financial resilience among the underserved
and underbanked Kenyan majority can be enormously boosted by helping them understand how money works in everyday life,” said Munyi Nthigah Tala’s General Manager during the media event,which also marked the start of the company’s annual financial literacy campaign christened Tala MoneyMarch.
“Financial literacy is the only way to help our customers build pathways to a more sustainable and secure financial future,” he emphasized.
For further information contact;
Valerie N Mumia
M: 254 704658936
Tala is a global technology company building the world’s most accessible financial services. More than 7.5 million people across Kenya, the Philippines, Mexico, and India, have used Tala products to start and expand small businesses, manage day-to-day needs and pursue their financial goals with confidence. Tala has raised more than $350 million from visionary investors including Upstart, the Stellar Development Foundation, RPS Ventures, the J. Safra Group, IVP, Revolution Growth, Lowercase Capital, and PayPal Ventures.