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Tala: Kenyan borrowers resort to skipping meals, cutting clothing expenses

The report released by one of the leading digital lending companies, Tala, has revealed that its customers are spending less on personal expenses such as clothing and travel/outings, which are considered luxuries.

According to the report released in Nairobi on Tuesday, March 19, Kenyans are spending only 16 per cent of their loans on personal expenses this year compared to 25 per cent last year.

A huge amount of 29 per cent is being spent on utility bills such as rent, electricity and internet, which is slightly higher than last year’s 23 per cent.

The result showed that despite the tough economic challenges consumers have been facing, they still have a savings culture of 25 per cent, which is similar to 2023.

Also read: Tricks of doubling your Hustler Fund borrowing limit

Around 15 per cent of the money is also spent on emergencies such as medical expenses, while 14 per cent is used for contributions such as fundraising and helping family or friends.

The report also found that over the past six months, 55 per cent of higher spenders have coped by cutting back on spending and reducing spending on luxury items.

Only 23 per cent of higher spenders are dipping into their savings to cope, suggesting that while consumers are generally saving, some are skipping meals or selling assets to make ends meet.

In addition, 44 per cent are now working overtime or taking on extra jobs to manage bills and family expenses, up from 35 per cent last year.

According to the report, 18 per cent of consumers with higher expenses are skipping meals to cope, and 14 per cent are now moving their children from private to public schools.
Change in borrowing

Also read: 57% of Kenyans used mulika mwizi phones used to borrower from Hustler Fund

The findings also showed that consumers are reducing their borrowing by 43 per cent this year, compared to 59 per cent in 2022, as they adjust to the lower likelihood of future borrowing through digital lenders.

The report also indicated that it is likely that consumers are borrowing less from digital lenders because they are borrowing from saccos or chamas, as 25 per cent of their income is channelled into saccos, chamas and fixed deposit accounts as savings.