The majority of Kenyan consumers remain confident in their ability to repay digital loans, even in the face of ongoing economic difficulties according to a survey conducted by digital lender Tala.
It found that 70% of digital credit consumers attributed the increased confidence to a decline in inflation rates over the past six months.
Borrowers primarily used loans for education (46%), business supplies (44%), and daily living expenses (26%).
Annstella Mumbi, General Manager at Tala, emphasized the critical role of accessible and affordable credit in empowering individuals and businesses.
“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,” Mumbi said.
While inflation has eased, 80% of Kenyans reported feeling the pinch, especially in food and grocery prices.
However, many have adapted to the rising cost of living by cutting back on expenses and exploring alternative income sources. For instance, the survey states that 56% of Kenyans reduced their spending, while 51% turned to digital credit providers, 31% started side hustles, and 20% launched new businesses.
Digital Credit: Need and Demand for Consumers’ Financial Literacy
The Monetary Policy Committee (MPC) has expressed confidence in the current inflation outlook, citing the moderating trend in core prices and anticipated favourable crop harvests.
Cytonn Investments anticipates that inflation will remain within the Central Bank of Kenya’s target range of 2.5% to 7.5%. This outlook is primarily supported by the strengthening Kenyan shilling, the ongoing tight monetary policy, and decreasing fuel prices.
“The risk, however, lies in the fuel prices which despite their decline over the last months, remain elevated compared to historical levels,” Cytonn notes.
While the MPC remains optimistic about the economy’s resilience and forecasts a growth rate of 5.4% for 2024.
