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Kenyans borrowed Sh288Billion through Fuliza in 6 months
In May this year, CBK’s Monetary Policy Committee raised the base lending rate to 7.50 per cent citing elevated inflation risks due to increased global commodity prices and supply chain disruptions. Consumer Spending in Kenya is expected to reach Sh6771818.00 million by the end of 2022 from Sh6588723 Million in 2019, according to Trading Economics global macro models and analysts’ expectations.
By Steve UMIDHA
The amount of cash disbursed on Safaricom’s overdraft platform, Fuliza, hit Sh288 billion in the first half period up from Sh220.38 billion in the same period last year – a rise from Sh176 billion in a similar period in 2020.
The jump in overdrafts translates to Sh1.57 billion daily borrowing between January and June this year, compared to Sh1.2 billion and Sh972.3million over a similar period of 2021 and 2020 respectively, new data now shows.
Borrowing on the platform among Kenyans, has been surging since 2020 when the economy was hit by the Covid-19 pandemic leading to massive shedding of jobs affecting household incomes.
The latest data signals skyrocketing cost of living among Kenyan households most of whom are living from hand to mouth.
Inflationary concerns have been dominating the airwaves recently, rising to a fever pitch in July when the overall inflation rate reached 8.3 percent.
It is hard to miss its impact in recent economic numbers, and now a growing number of Kenyans are pressed to the wall, with many conceding that the present cost of living is unlikely to let up in the near future.
The ensuing effect of rising inflation – which is a general increase in the prices of goods and services in an economy, has led to a slow growth in consumer spending among Kenyans, with most households today opting for cheaper alternatives to the products they were accustomed to.
In fact, figures by the Kenya National Bureau of Statistics (KNBS) show that the Consumer Price Index CPI in the country rose to 125.05 points in July from 124.22 points in June of 2022.
Ordinarily, when there is an upward change in the CPI, this means there has been an increase in the average change in prices over time – which eventually leads to adjustments in the cost of living and income.
Inflation has affected growth in real income, thereby curtailing consumers’ purchasing power.
While nominal earnings continue to rise due to labor market tightening, real earnings have been on a broad downward trend since last year and more particularly since the advent of Russia-Ukraine war.