Home Business Utility bills eat up majority of digital loans, report shows

Utility bills eat up majority of digital loans, report shows

Rising cost of living has driven many Kenyans to take up digital credit to pay for utility bills according to a report released Tala.

MoneyMarch Report by the digital credit provider shows that borrowers on the platform spent 29pc of their digital credit to pay for among other utilities, rent, electricity, internet and water bills within the last six months compared to 23pc reported last year.

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The report shows that the increase in spending on utility bills among borrowers was occasioned by the stagnated income despite rising cost of living during the period.

According to Tala, about 7 in 10 or 72pc of consumers stated that their financial situation has not improved, while others stated that their expenses are higher than their income, aligning with the decline in those with alternative sources of income.

“In the face of inflationary pressures, these findings indicate that Kenyans are standing resilient, leaning more into their entrepreneurial spirit and remaining hopeful for a better tomorrow,” said Annstella Mumbi, General Manager, Tala Kenya.

Additionally, Tala noted increased incidences of income delays, lack of capital, loan burdens, job loss and business closures in 2024 which put pressure on consumers’ spending behavior.

In the last six months, consumers also witnessed stagnation in savings which stood at 25pc same as last year while spending on personal expenses such as clothing, holiday and outings reduced to 16pc from 22pc last year.

“As Tala, we remain committed to our mission of supporting the Kenyan majority with innovative financial solutions as well as financial education that will empower our customers to seize growth opportunities and unleash their financial power, boosting our nation’s economy,” added Mumbi.

Spending on emergencies like medical expenses remained unchanged at 15pc as contributions for harambee and fundraising declined to 14pc compared to 16pc last year.

The FinTech lender survey over 1,000 Kenyans to understand the impact of the cost of living and credit usage between January and March of 2024.

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