Net borrowing by Kenyan consumers
continues to rise, with as many households spending on their daily needs
instead of investments – highlighting the growing cash crunch caused by a
wobbly economy.
In an ideal world, everyone would be
able to pay for food, housing and other necessities with their paycheck.
“A lot of Kenyan families
are using cash from payday loans, and digital lenders to be able to afford their
daily supplies,” said Jijenge Credit CEO Peter Macharia.
Jijenge Credit Limited specialises in
title deeds, log books and check–off loan services.
Those numbers are trending up, according to Macharia whose firm forecasts a sustained drift for the next few months, unless “something radical ensues".
“There’s been a reduced money circulation in the economy over the last several months, and this is broadly explaining the amplified appetite for borrowing right now."
He added that what is currently being witnessed is an indicator of economic slowdown as
Kenyans and businesses confront the ongoing economic challenges.
Indeed, figures by the national
Treasury show that cash circulating within and outside the banking system
dropped last year by 0.2 per cent or Sh9.9 billion, from a year earlier amid
the raging economic crisis marked by a worsened cost of living and a gloomy
outlook.
It further shows that the metric
also known as M3 money supply — the broadest measure of liquidity in the
monetary system, fell to Sh5.48 trillion from Sh5.49 trillion a year earlier.
Borrowing for consumption has been on
the rise for a while now, but that tendency seems to be mounting with salaried
Kenyans, operating on thin pay – slips, also feeling the pinch. Meaning they
can no longer stomach the high cost of living by today’s standards.
Borrowing for consumption simply
means that people are increasingly taking out loans to buy goods and services
for their personal needs, rather than for savings, indicating a trend where
individuals are relying more on credit to fund their current lifestyle and
spending habits.
Further figures on consumption
indicators by data agency, Statista, show that this year, the household
disposable income per capita in Kenya is forecast to amount to US$1.94k, while
the total consumer spending in Kenya is projected to amount to US$89.73bn in
2025.
On the other hand, the consumer
spending per capita on food and non-alcoholic beverages in Kenya is forecast to
amount to US$584.09, while consumer spending per capita on housing in Kenya
will amount to US$233.40.
Similarly, the consumer spending per
capita on healthcare in Kenya is forecast to amount to US$19.86 this year,
according to the same outlet.
