At least 3 in every 10 Tala customers borrow to save as opposed to the normal culture of spending the money immediately.
According to the Tala 2023 Money March “State of the Economy” report, customers spend 25 percent of their earnings in savings with chamas, saccos or fixed deposit accounts.
“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,” stated Teddy Kahiro, Senior User Research manager at Tala.
Also Read: USAID Launched $100M Investment to Enhance Water, Sanitation and Hygiene
“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.”
The report also highlighted the need for financial literacy, as the customers surveyed disclosed that they were experiencing increased expenditure over the last six months, expressing their need to learn more about budgeting and saving.
“The hypothesis here could be that people are holding onto money rather than investing it in a new business amidst the ongoing economic crunch” Kahiro concluded.