Serrari Group

A notable financial trend is rapidly taking root in Kenya, with new research revealing that over 50 percent of the population now turns to debt to cover their daily financial needs. The study, conducted by Consumer Insight, highlights that an increasing number of Kenyans are relying on digital lenders, marking a significant shift in financial behavior.

The report, titled “Wakenya,” based on a survey conducted across 16 counties from 2016 to 2023, indicates that borrowing as a way of life has become a growing concern. According to the research, the proportion of Kenyans who predominantly borrow from digital lenders has surged to 52 percent in 2023, up from 40 percent in 2019.

“This trend of economic worry is manifested in family members actively working and earning incomes, a 10 percent increase from 2018, and in the reliance on debt, ultimately leading to borrowing becoming a way of life,” notes the report.

Notably, 59 percent of Kenyans now use their mobile phones to borrow, a substantial rise from the 33 percent reported in 2016. The research further reveals a shift in the sources of loans, with digital lenders increasingly replacing traditional bank branches.

This transition in borrowing habits has also been attributed to the surge in digital financial services, largely fueled by the growth of digital lenders and the advent of M-Shwari in 2012. M-Shwari allows M-PESA customers to save and access loans, revolutionizing the lending landscape in Kenya, where reliance on family, friends, banks, and Saccos was the norm.

Beyond the financial realm, the “Wakenya” research identifies several trends reshaping Kenyan society, including the digitization of work, home, and school, heightened health awareness, shifts in culture, changes in media consumption, and an increasing acceptance of illegal drugs, notably cannabis.

The study suggests that digitization has also left its mark on the insurance and media sectors. In insurance, digitization is ushering in new business models through the integration of Artificial Intelligence and cloud computing, leading to improvements in underwriting, risk assessment, and claims processing.

Furthermore, Kenyans are embracing e-shopping and e-learning, with one in three now resorting to platforms like Facebook and Instagram for online shopping. This preference for personalized and interactive shopping experiences on social media has disrupted the traditional storefront websites.

As Kenya undergoes these significant societal and financial changes, the study serves as a valuable snapshot of the evolving landscape and the challenges and opportunities that come with it.

Photo Source (Wilberforce Okwiri, Standard)

19th October, 2023
By: Delino Gayweh
Serrari Financial Analyst

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