Shifts in Kenya’s Economy: Rise in Business Ownership and Decline in Employment

The Tala report reveals an increase in business ownership in Kenya, while full-time employment declines. Financial difficulties are widespread, yet optimism persists among many. Growing reliance on credit is noted, with calls for enhanced financial literacy and responsible borrowing. Future aspirations remain focused on business and home ownership, supported by ongoing financial education initiatives.

The Tala report reveals a significant transformation in Kenya’s economic landscape, where business ownership has risen by 7 percentage points while reliance on full-time employment has fallen by 5 percentage points compared to the previous year. The findings indicate that the ever-increasing cost of living has hindered many Kenyans from launching side businesses, thus limiting their potential to diversify their income sources.

Financial hardships are prevalent, with a staggering 90% of those surveyed reporting financial difficulties over the six-month period preceding the report. Furthermore, 32% of respondents have indicated experiencing financial stress. Despite these challenges, there remains a resilient spirit, as nearly 46% of respondents profess optimism regarding their financial future.

The report highlights a growing dependence on credit, as over one-third of Kenyans have escalated their borrowing due to the high cost of living and delayed income. Borrowers primarily seek funds for business expenses, educational costs, and basic living needs. Encouragingly, around 80% express confidence in their ability to repay their loans. Moreover, 52% prefer maintaining their borrowing relationship with a single lender, be it a licensed Digital Credit Provider or a traditional bank.

Boniface Kamiti, the Manager for Consumer Protection at the Competition Authority of Kenya, emphasized the essential role of customer education among digital lenders. He advocates for the promotion of responsible borrowing and financial literacy among consumers, stating that, “Digital lenders should see their role not just as providers of credit, but as partners in their customers’ financial well-being.”

The aspirations for financial stability remain strong, with business and home ownership cited as primary goals for many Kenyans over the next five years. Many individuals allocate between 11% to 20% of their income for investments, mainly in savings, SACCOs, and chamas. Nonetheless, apprehensions surrounding losses and a lack of trust in investment platforms have deterred some from pursuing greater investment opportunities.

Tala’s MoneyMarch campaign, now entering its fifth year, endeavors to equip Kenyans with essential financial education, resources, and access to credit, fostering economic empowerment. The report emphasizes the rising importance of entrepreneurship, financial literacy, and digital lending as vital elements in Kenya’s dynamic economic framework.

In conclusion, the Tala report illustrates a shifting economic paradigm in Kenya marked by an increase in business ownership, while full-time employment declines. Financial struggles persist for many, yet a majority express optimism for the future. The growing reliance on credit signals evolving consumer behavior, and educational initiatives are crucial for supporting financial literacy. Entrepreneurship and access to resources are essential to navigating Kenya’s economic challenges.

Original Source: www.tv47.digital