A new study has revealed shocking statistics about how majority of Kenyans struggle to make ends meet and end up taking loans just for survival.
According to the household survey, poverty has contributed immensely to borrowing among Kenyans. And despite the spread of formal financing, more than 60 per cent of the population still uses informal borrowing solutions such as chamas, friends and family.
What’s more shocking is that most desperately take goods on credit from their local shopkeepers, just to get to the end of the month.
The findings are part of a survey released by FinAccess, which measures the access, usage, quality and impact of financial services in Kenya.
“Debt is used overwhelmingly for consumption, while savings are used for a range of purposes. Shopkeeper goods on credit has risen from 10 per cent in 2016 to 30 per cent in 2019,” states the report.
Taking loans from groups or chamas, family, friends and neighbours as well as taking credit from mobile banking platforms contribute to the perception that Kenyans are heavy borrowers.
But these debts come with challenges, as over 50 per cent of debtors sell their assets, and borrow or cut back on their expenses to repay their loans.
According to the report use of mobile money, mobile banking and digital apps has risen considerably, with digital apps now being used by two million people. About 79 per cent of Kenyans have mobile money accounts, 25 per cent have mobile bank accounts, while 8 per cent take digital loans.
The survey also intimates that Kenyans are becoming a more saving people, which is paradoxical, based on their borrowing nature.
The mobile wallet, the survey states, is the most popular saving device.