This archive report was first published on 23 June 2020.
Published on June 23, 2020, a new report by the Boston Consulting Group highlights the growing reliance on digital loans among Kenyans as the COVID-19 pandemic takes its toll on domestic budgets.
According to the Consumer Sentiments Survey conducted in April and May 2020, the percentage of respondents who have had to seek short-term credit doubled during the survey period.
Mobile money operators were the most common sources of this credit, with 88% of those loans coming from M-Shwari, Fuliza, or KCB-M-Pesa, as reported by the survey.
"In May, 29% responded that they had taken out a short-term loan, compared to 16% in April," the report indicates.
Concerns about COVID-19 were still at the top of consumers' minds in May, but were slightly ahead of rising socio-economic concerns such as business closures, loss of jobs, and increased poverty.
"These fears are based in reality as 92% of Kenyan consumers surveyed reported they are currently experiencing a negative impact on their household income; and only 7% said they felt no negative effects on their household income," Takeshi Oikawa, one of the authors of the report, told the Nation.
Concerns about the ability to meet personal financial obligations have also arisen, with 68% of respondents reporting that they were worried about being able to meet their needs in May, up from 59% in April.
Monthly mortgage and rent payments top the list of concerns, followed by utilities, school fees, short-term loan payments, and support for extended family members.
"Most don't expect a quick recovery. About 70% said they believe it will take at least six months to rebound financially, and 23% think that recovery is more than a year away," the study said.
