One notable discovery emerging from the research encompassing all four markets within Tala's operational scope is the predominance of women in getting education loans. Specifically, in Kenya, close to 50 per cent of all education loans are taken by women.
"In general, research on spending patterns suggests that when women have the opportunity to use financial services such as credit, households tend to direct increased financial resources toward children, education, and healthcare. Consequently, this contributes to the overall well-being and productivity of their families," explains Teddy Kahiro, User Research Manager at Tala.
While the government is implementing free primary education and free day secondary education, the financing entails supplementary expenses such as supplies, uniforms, transportation, and textbooks, as well as Competency Based Curriculum (CBC)-based assignments and activities that incur extra expenditure, all of which families must personally bear.
At the same time, due to shortcomings in the public education sector, a significant number of parents and guardians opt to enrol their children in private schools, which do not benefit from State financing, meaning parents have to foot the entire cost.
"The findings from this research remind us of the financial burden tied to these expenses. The rising costs of education add a layer of challenge for both parents and students in effectively managing their finances and maintaining peace of mind," Kahiro said.
"At Tala, we are dedicated to providing comprehensive financial solutions and addressing the increasing costs of education. We firmly believe that such initiatives are essential for the improvement of our communities and are pivotal in shaping a more equitable and promising future for all."
The global report further reveals that in Kenya, the average loan size in 2023 was about Sh17,000, or over one-third of the average monthly income.
Previous research has shown that many of the children who are sent home due to fees balances are those from single-parent households (61 per cent compared to only 16 per cent from two-parent homes).
A 2018 survey by Dignitas and the Future of Learning Fund for instance established that when this happens, some parents borrow to get their children back while others negotiate payment plans with the schools, adding that over 90 per cent of these children return to school within the week, which could explain why apps such as Tala come in handy.
This is especially for those in the informal sector who cannot access credit from banks and Saccos, unless they have saved in chamas.
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