NAIROBI, Kenya March 13 – Nearly three in ten (85 percent) Tala customers have adopted a saving culture, channeling more of their loans to savings with the aim of achieving financial independence.
Digital borrowers are known to borrow to spend immediately instead of saving in a bank.
However, Kenyans are now resolving to save amid economic uncertainty.
Tala’s 2023 MoneyMarch “State of the Economy” report shows that 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.
“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 cited that slightly over half of consumers have had higher spending in the past 6 months and are copying this majorly by reducing their expenses and reducing spending on luxury items.
“About a quarter of those with higher expenses are eating into their savings to cope, implying consumers are generally saving,” Kahiro noted.
On financial literacy, the report indicated that over half of the surveyed customers who said that they were experiencing increased expenditures over the last six months wanted more guidance on creating a budget to manage expenses, being able to save effectively, and healthy borrowing.
“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.
On financial challenges, Tala’s report has cited that most of its customers are going through several financial challenges, primarily the “cost of living expenses,’ with only a third stating that their financial situation has improved over the past six months.
