A Money March report released by the digital lending company, Tala, has revealed that most Kenyans are taking loans for business-related reasons.
According to a report shared on March,19,2024, most loans borrowed by Kenyan customers were directed to business needs.
In addition, the report showed that customers with full-time jobs as their main source of income borrowed more loans as compared to business owners.
As per the analysis, 46 percent of consumers are borrowing for business expenses in 2024, which is relatively lower than the 55 per cent recorded in 2023.
The latest Tala Impact Report has also indicated that 33 per cent of its customers are taking personal loans to pay school fees for their children.
Tala Loans Used for Fees
According to the lender, the proportion of individuals citing school fee payment as their motive for taking out loans has increased from 20% in the 2022 report to 28%.
Similarly, 31 per cent are borrowing funds to enhance their business inventory by adding stock.
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The number of those borrowing funds for rent is 12 per cent while 7 per cent are borrowing money for transportation costs.
Additionally, there is a growing trend of individuals using credit for medical expenses.
This presents an opening to collaborate with health insurance companies to offer plans where customers can repay their medical bills through monthly installments.
As compared to other years, the medical expenses loans increased to 25 per cent.
High Cost of Living
Also, the high cost of living has made it difficult for people to afford essential expenses like rent, leading many to turn to borrowing.
In the report, there has been a 4 per cent rise in the number of people borrowing funds to cater for rental bills from the previous years.
According to the report, nearly 57 per cent of consumers rely on multiple digital lenders, likely borrowing from one to pay off another, ultimately decreasing the overall amount borrowed.
Also Read: A Percentage of Tala Borrowers Have Adopted Saving Culture
The report has also highlighted that 21 per cent of Kenyans are taking loans for utility bills.
76 per cent of individuals are taking loans to buy food and groceries, 68 per cent are using their loans to pay electricity and water,56 per cent is paying for cooking gas and kerosine, 34 percent is being used to pay for internet while 24 per cent is being used to pay phone bills.
Tala is an instant mobile loan App in Kenya that sends loans directly to an applicant’s M-pesa in less than 5 minutes.
The lender’s app offers loans from ksh2000 to ksh30,000 with rates as low as 4 per cent.