Despite being a topic that not many people like to discuss, we can’t fail to acknowledge the fact that the citizens of most third-world countries struggle with paying their bills.
In Kenya, for example, more than a third of the population relies on payday loans to cater for their daily expenses. And as we all know, payday loans really aren’t a great solution because of their mode of repayment, as well as high-interest rates.
Kenyans earning low wages find it very hard to survive the tough economy. The cost of living is high and for one to put food on the table, they must utilize payday loans. And as if that’s not enough, the effects of the pandemic have worsened the situation. Even though the local governments strive to make things better, will this trend of using payday loans ever come to an end one day?
Payday Loans are Becoming More Popular in 2021
Everyone thought that the economy would bounce back in 2021. But so far, payday loans are increasing in popularity. This is a clear indication that we are yet to achieve financial stability. It’s not just in Kenya but the payday loan market has increased by at least 15% worldwide. And by the look of things, this figure seems to keep on going higher.
During such tough times, it shouldn’t come as a surprise that payday loans are becoming more common. When you happen to come across a sudden expense, a couple of days before getting your paycheck, the thought of borrowing some money doesn’t always seem so terrible. Most online lenders have streamlined the process of applying and getting approval for a payday loan. This, therefore, makes these types of loans the fastest solution when you have an emergency expense coming your way.
Though fast and easy to acquire, payday loans have high-interest rates. And most people are blinded by the convenience, and forget about the costly interests. Obviously, with enough research, you can always vet through several vendors and choose the one with favorable terms. But where does the time to do this research come from when you are in urgent need of money?
Many Kenyans Struggle with Paying their Bills during the Pandemic
Even before the pandemic, a lot of Kenyans struggled with paying their bills. When the coronavirus set in two years ago, it worsened the situation. Because of the social distancing measures and lockdowns, many businesses were closed and tons of employees were laid off. The aftermath of breadwinners losing their jobs is what led to the difficulties in paying bills.
We aren’t just talking about rent. A good number of Kenyans can’t afford basic needs such as food and clothing. Let us not even get started with access to quality healthcare. The government has set up measures such as access to free healthcare and education, but there is still a long way to go before the entire population can enjoy financial freedom.
As much as financial experts may see the negatives in payday loans, they have been of immense help to many Kenyans. Medical bills and other types of expenses that can’t be postponed can be easily settled through payday loans. The approval process is relatively fast, and that’s why Kenyans love them.
It is only through the creation of employment and education on money management that Kenyans can break free from payday loans. This will require the participation of the government, financial institutions, and the citizens themselves.
What is the Prognosis? Will Kenya Get Better?
The Kenyan economy has come from very far. We have to applaud the efforts of the government and the citizens in building their economy from scratch. This country’s economy is held together by key sectors such as agriculture and tourism. Kenya also boasts of a hardworking population that contributes to bettering the economy.
We can predict that the financial situation in Kenya will get better in 2022. Currently, the health sector is working around the clock to stop the spread of coronavirus. Vaccines have been rolled out and things are slowly returning to normal.
When Kenya gets a hold of the ravaging effects of this pandemic, the economy will definitely stabilize. People will regain their jobs and businesses will make more profits. Therefore, there won’t be much need for payday loans.
Also, at the rate at which Kenyans are taking payday loans, the majority of them have realized the pros and cons of such types of loans. With time, the citizens will be able to make wiser financial decisions.