Small and medium enterprises are expected to continue leveraging digital lending platforms to stabilize their operations amid rising global geopolitical uncertainties.
A survey by Tala indicates that amid rising cost of living, many SMEs have turned to digital lenders to boost their supplies to cope with changing consumer habits.
“What we have seen is that households are operating under very high financial pressure and in response they are adjusting how they earn as well as how they spend and many are actually bridging their financial gaps by either borrowing, saving or even community support like chama and community support,” said Teddy Kahiru, User Insights Manager at Tala.
The MoneyMarch 2026 by the firm indicates that 45pc of borrowers took loans for the purpose of securing supplies for their businesses, 37pc for education purposes while 23pc too loans to meet their daily expenses same as medical expenses.
Due to the rising cost of living, 51pc of respondents reported an increase in their borrowing habits on account of the rising cost of living coupled with slow employment growth.
The report indicates that borrowers whose main source of income is full-time employment continue to fall within the last three years, from 57pc in 2023 to 45pc this year, while that of business owners has risen to 28pc signaling the shift in income stability.
“Even for these people who are starting their business, they are facing a bit of seasonality in terms of their income. Customers are not paying on time, there is up and down in restocking and that affects their cash flow and in the process becomes very difficult to manage their financials and this affects their resilience even in the short term and that is how they end up relying on credit to smoothen that income instability,” added Kahiro.
With digital lenders now emerging as the suitable alternative to access short term credit for day to day business activities, industry players are now calling for collaborations in the financial technology space to strengthen consumer financial literacy.
“Majority of Kenyans still don’t understand what it means to have a credit score. They don’t understand the value of positive listing and I think there is a lot of collaboration that can happen with credit bureaus and do a lot more education to consumers,” said Annstella Mumbi, Tala Kenya General Manager.
The report shows that 91pc of consumers prefer digital lending apps for loans, compared to 28pc who prefer banks and 24pc who opt for saccos, family and friends.
