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Families turn to borrowing to buy food as Covid-19 bites
by VICTOR AMADALA Business Writer
Families in Kenya are borrowing for survival after the coronavirus pandemic stopped their revenue streams, a survey by GeoPoll shows.
The Financial impact of coronavirus in Sub Saharan Africa, report shows Kenyans are second in the region after Ivory Coast in borrowing as a means of survival at 36 per cent with only 16 per cent relying on a regular income.
According to the survey, 26 per cent have turned to their savings while 21 per cent have adopted other ways to cater for expenses. In Ivory Coast, 47 per cent are borrowing to meet their daily needs.
The report, which sampled five countries in the region, found out that 42 per cent of those in the informal economy borrow to cope with the vagaries of Covid-19 compared to 22 per cent in the formal sector.
The survey was conducted remotely via SMS from June to July 2020 in Kenya, Nigeria, South Africa, Ivory Coast and Mozambique.
Older people borrowed more than young ones, with 37 per cent of those aged 18-25 stating that they are paying for expenses with savings, compared to just 20 per cent of those aged 36 and above.
Six per cent of the respondents reported they have sufficient funds to cover their household expenses for more than five months, and most are already running down their savings or relying on credit.
Food topped the priority list at 51 per cent followed by rent at 23 per cent.
In Kenya and Mozambique food ranked at a high of 63 per cent and 57 per cent respectively. School fees was at 21 per cent while rent, vehicle loan, and credit card payments were also listed by about 13-14 per cent of respondents.
Four out of five of those polled in the survey of 2,500 respondents, reported that their income has decreased during the pandemic, with those in informal jobs, particularly in trade and agriculture, reporting the most widespread and largest falls in incomes.
Overall, 60 per cent of formal sector workers reported income falls, while 88 per cent of informal sector workers reporting reduced earnings.
The International Labour Organisation (ILO) estimates that the informal sector accounts for over 80 per cent of the workforce in sub-Saharan Africa.
“The closure of borders, restrictions on movements, and suspended education and hospitality sectors have wrought financial havoc across the African nations studied, with those in informal employment being hardest hit” Roxana Elliott, vice president marketing and content at GeoPoll said.
Despite the harsh economic effects being felt, a majority in the nations studied believe their governments should prioritise protecting people from the virus, rather than focus on reopening economies.
It was run through GeoPoll’s mobile surveying platform, which enables safe and effective data collection via SMS, voice call, and other modes even when in-person research cannot be conducted.
Source: The Star
