Quiet transformation in lending patterns powered by credit access
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In a report commissioned by digital lender Tala, it has been revealed that digital credit in Kenya has had a significant positive impact on quality of life, financial control, and business growth, particularly among women.
The report, conducted by 60 Decibels, surveyed over 10,000 Kenyans and found that 90% of the surveyed Kenyans reported an improvement in their quality of life after taking a digital loan. This improvement was reflected in better access to quality meals, education, and healthcare, with 69% of borrowers experiencing a boost in meal quality and 85% reporting improved self-confidence.
The report also highlighted the impact of digital credit on financial control. Digital credit users in Kenya have shown increased ability to handle emergencies, evidenced by their confidence in raising over 60% of their average monthly income on short notice. Digital payment platforms also foster greater financial record-keeping and traceability, advancing users’ financial profiles and control.
When it comes to business growth, the report found that 53% of borrowers used their loans for business purposes. Of these entrepreneurs, 90% reported an improved business outlook, often reflected in better profits, increased sales, and business expansion. A study found that small digital loans (~$36) correlate with increased spending per transaction (+15%) and better economic activity, particularly when loans are used for business.
Women constitute a significant share of first-time digital loan borrowers, with 33% of Tala's borrowers being women. The report also highlighted the importance of specialized programs aimed at removing barriers such as lack of collateral or credit history by lowering interest rates and tailoring services to women’s needs. These efforts help women move from economic participation towards leadership in local economies.
Kenya's integration of digital IDs, mobile payment platforms, and interoperable data systems enables women to access credit and markets more securely and directly, further empowering women financially and economically. However, the report also acknowledges that gender gaps remain in digital financial service usage due to phone ownership and employment disparities.
In conclusion, digital credit in Kenya is transformative for women’s economic and personal empowerment, enhancing their quality of life, control over finances, and capacity to grow businesses. This impact is supported by digital infrastructure, inclusive financial products, and targeted programs addressing women’s specific barriers. The report suggests that digital credit is playing a pivotal role in Kenya's financial landscape.
- The report indicates that improved financial control among digital credit users in Kenya is demonstrated by their ability to handle emergencies and raise a significant portion of their monthly income on short notice, as well as through enhanced financial record-keeping and traceability.
- The integration of digital IDs, mobile payment platforms, and interoperable data systems in Kenya allows women to access credit and markets more securely, empowering them financially, but it also highlights that gender gaps persist due to phone ownership and employment disparities.
- Technology plays a crucial role in aiding business growth among digital loan borrowers in Kenya, as a study found that small digital loans correlate with increased spending per transaction, better economic activity, and more positive business outcomes, particularly when loans are used for business purposes.
