Kenyans relying on digital loans for daily expenses amid high cost of living - Report
There
has been a noticeable increase in personal loans and digital lending, fresh
data from the Central Bank of Kenya (CBK) has now revealed.
According
to CBK, over 50% of these borrowers take out loans for their daily
expenses, rather than investments or long-term projects.
This
comes as many Kenyans have been struggling to keep up with the rising cost of
living, forcing a growing number to rely on loans just to make ends meet.
CBK
noted that, with inflation rates steadily rising, the purchasing power of the
average citizen has been diminished.
Basic
goods such as food, fuel, and housing have seen sharp price hikes, making life
increasingly difficult, especially for those in the lower income bracket.
In
recent years, the Kenyan economy has been hit hard by various factors,
including the effects of the COVID-19 pandemic, rising global commodity prices,
and unpredictable weather patterns affecting agriculture.
For
many Kenyans, earning half a million shillings a year might have once been
considered a secure position, but in the current climate, it has become
impossible.
A
great number now make just enough to cover essential expenses, while others
struggle to cater to their most basic needs.
The
soaring cost of living has stretched household budgets to the limit, leaving
many with little choice but to seek loans to bridge the gap.
This
reflects the economic strain that has left many Kenyans resorting to borrowing
not just to maintain their lifestyle but to cover basic needs as well.
The
growing dependency on loans has raised concerns among financial experts who say
loans can offer temporary relief, but they also come with high interest rates
that can easily trap borrowers in a cycle of debt.
Digital
lending in Kenya has experienced significant growth, offering quick and
convenient access to loans. However, this rapid expansion has also led to
concerns about high interest rates, which often burden borrowers.
The
rise of digital lending apps and shylock businesses has been driven by Kenyans
seeking alternative financial solutions to meet their daily needs.
Many
Kenyans have found themselves defaulting on repayments, which further complicates
their financial standing as they face penalties, increased borrowing costs, and
potential legal actions.
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