Kenya’s Economic Shift: Rise in Business Ownership Amidst Decline in Full-Time Employment
A report by Tala indicates a shift in Kenya’s economy with an increase in business ownership and a decline in full-time employment. While many Kenyans face financial challenges, a significant percentage remain optimistic about their future. Increased borrowing is prevalent, raising the need for financial literacy and responsible lending practices as critical in overcoming economic hardships.
A recent report by Tala reveals significant changes within Kenya’s economic framework, particularly noting a rise in business ownership alongside a decrease in full-time employment. The MoneyMarch 2025 Report indicates that business ownership has grown by 7 percentage points, while reliance on full-time employment has diminished by 5 percentage points over the past year. This trend is partially attributed to the depleted financial capabilities of Kenyans, leading to fewer individuals starting side businesses as they grapple with an increasing cost of living.
The economic stress is palpable, with 90% of survey respondents admitting to experiencing financial hardships in the last six months; 32% report substantial financial pressure. In contrast, a noteworthy 46% of those surveyed voiced optimism about their financial prospects, demonstrating resilience amid challenging economic circumstances.
As living expenses rise and income delays persist, over one-third of Kenyans have intensified their borrowing. The majority of these loans are intended to address business expenses, educational needs, and everyday living costs. Encouragingly, about 80% of borrowers feel poised to successfully repay their loans, with 52% choosing to maintain relationships with a single lender, such as a Digital Credit Provider or a bank.
Boniface Kamiti, the Manager for Consumer Protection at the Competition Authority of Kenya, emphasized the role of digital lenders in promoting financial literacy. He remarked, “Digital lenders should see their role not just as providers of credit, but as partners in their customers’ financial well-being.”
Looking ahead, many Kenyans are setting ambitious financial goals, primarily focusing on business and home ownership over the next five years. Many individuals allocate between 11% and 20% of their income towards investments, notably savings, SACCOs, and chamas. Despite their ambitions, concerns regarding potential losses and skepticism toward investment platforms hinder some from investing more significantly. Tala’s MoneyMarch initiative, now in its fifth year, seeks to enhance financial education and access to credit, thereby fostering economic empowerment in Kenya. The report accentuates the increasing significance of entrepreneurship, financial literacy, and digital lending as pivotal components of Kenya’s economic evolution.
The Tala report illustrates a notable shift in Kenya’s economic environment, underscoring the decline in full-time employment and the concurrent rise in business ownership. Despite economic strains, many Kenyans remain hopeful about their financial futures. The urgency for financial education and responsible borrowing practices is amplified, as is the need for enhanced credit accessibility, which are essential for navigating the current economic landscape.
Original Source: www.tv47.digital
