Kenyans are feeling the pain of the ‘affordability crisis’: No let-up

Kenyan households are being forced to make difficult financial trade-offs and reduce their standard of living amid rising costs in essential goods such as food, energy, and housing.

 

According to Tala’s 2026 MoneyMarch Report on the state of the economy, about 89% of those polled say rising costs affect their household budgets, forcing them to cut down on essential needs and financial goals like rent and food.

“More than 1 in 5 consumers feel that living costs have increased by over 20% in the past 6 months, with essential costs like food and utilities being the primary drivers of financial strain,” noted the report.

Released Today, the survey further found that full-time employment was declining among salaried Kenyans, while business ownership was on the rise. Interestingly, those in active employment are now engaging in side hustles, suggesting that as financial pressure rises, fewer consumers have the flexibility to diversify income sources.

 

It is a global phenomenon driven by inflation, low wage growth, and severe supply shortages economically known as affordability crisis, a situation where consumers are choked by increased demand, investment speculation, and inflationary pressures on essential goods. It reduces their purchasing power making housing and daily necessities increasingly unreachable for many.

 

The International Monetary Fund (IMF) defines an affordability crisis as a widespread economic situation where the cost of essential goods, primarily housing, food, and energy, rises significantly faster than household incomes, forcing many to cut back on basic needs.

 

With business ownership rising among Kenyans, the report noted that this shift signals that the majority of local households remained resilient, even though the percentage of salaried workers engaging in side hustles had declined, indicating tighter financial constraints on diversifying income streams.

 

As a result, most households are turning to cheap and easily accessible loan apps primarily for survival needs, as borrowing is becoming more targeted.

 

These loans, according to Annstella Mumbi, General Manager at Tala Kenya, are used largely for essentials and business needs, helped by consumers’ financial literacy being employed by most financial institutions today.

 

Despite digital lenders now becoming the first stop during financial emergencies, ranking ahead of informal networks such as family support or chama payouts, with 91% of consumers borrowing from DCPs (up from 87% last year), borrowing habits are declining. People are borrowing less frequently and taking smaller loan amounts, according to the survey.

 

When loans are taken, they are largely used to cover business costs, school fees, and everyday living expenses.

 

Borrowing for medical expenses has increased significantly, with 26% percent of consumers reporting that they borrowed to settle a medical bill for themselves, a friend, or a family member in the last six months, compared to 17% last year.