Majority of digital credit consumers confident in loan repayment amid economic challenges - Report

This is according to the first half of 2024 Customer Barometer data released by Tala, which surveyed 2,637 respondents across key markets.

Borrowing habits have remained largely unchanged from the last half of 2023, with only 20% of respondents reporting increased borrowing in the first half of this year. The average borrowed amount ranged between Ksh 10,000 and 20,000.

Regarding inflation, the survey revealed that while customers still feel the impact, it has lessened over the past six months, with a 20% drop in inflation from November 2023 to May 2024. Despite this overall relief, 80% of Kenyans believe that food and grocery costs have risen in the last six months, and 83% reported an increase in their overall living expenses during the first half of this year.

To manage the high cost of living in the first half of 2024, 56% of Kenyans reduced their expenses. They reported feeling less pressure from these cutbacks compared to 2023, indicating an improvement in financial well-being.

Additionally, 51% of respondents borrowed from digital credit providers to bridge income gaps, 31% started side hustles, 20% launched their own businesses, and 7% borrowed from banks to cover cash shortfalls.

“Examining the consumer credit trends of the first half of this year, it is evident that economic equity is a critical issue, as quick access to funds can be the difference between financial stability and hardship for many households,” stated Annstella Mumbi, General Manager at Tala.

In the first half of 2024, the primary reasons Kenyans borrowed were for education/school fees and school supplies. Other significant reasons included purchasing stock for existing businesses, medical expenses, emergency expenses, and starting side hustles or businesses.

“Today’s financial infrastructure fails to serve much of the world’s population. That is why we remain committed to leveraging advanced technology and human creativity to address what traditional institutions cannot or will not. Our goal is not only to help our customers navigate this challenging period but also to empower more individuals to unlock their economic potential,” concluded Ms. Mumbi.