More Kenyans going into debt – this time borrowing for consumption  

By Steve UMIDHA

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.

Instead, “a lot of Kenyan families are using cash from payday loans, digital lenders to be able to afford their daily supplies,” noted Peter Macharia – the Chief executive officer (CEO) of Jijenge Credit Limited which specialises in title deed, log boog and check – off loan services.

And 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 explains, adding 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 US$19.86 this year, according to the same outlet.