Stephen Ruhohi, Senior Manager, Growth & Marketing - Tala, Kenya &Expansion marketsAs 89 per cent of households continue to feel the pressure of the rising cost of living, more Kenyans are turning to side hustles and small businesses to supplement their incomes.
The report shows that business ownership is also on the rise, as households look for additional sources of income and greater financial security.
At the same time, 91 per cent of borrowers now rely on digital credit providers in financial emergencies, underscoring the growing importance of responsible credit in helping entrepreneurs seize opportunities and keep their businesses moving.
But access to finance alone does not guarantee success. What matters ultimately is how that capital is used.
A loan is a tool, not a guarantee of business success. The businesses that thrive are those that make every borrowed shilling work harder.
First, borrow with a clear purpose. Before applying for credit, identify exactly how the money will help the business generate additional income or solve a specific challenge.
Whether it is purchasing inventory, investing in equipment, or financing marketing, every shilling should have a clear job to do and a measurable benefit. Borrowing simply because funds are available can quickly turn useful credit into unnecessary debt.
Secondly, separate business and personal finances. Many small-business owners regularly draw money from their businesses to cover household expenses. While this may seem harmless at first, it can make it difficult to know whether the business is genuinely profitable. Maintaining separate accounts and recording every transaction gives entrepreneurs a clearer picture of how the business is performing and helps them make better financial decisions.
Managing cash flow, rather than focusing only on profit. A business can appear profitable on paper while still struggling to pay suppliers, employees or loan instalments because its cash is tied up elsewhere.
Tracking when money comes in and when expenses fall due helps entrepreneurs anticipate shortfalls, meet their obligations and keep the business running smoothly.
Where possible, borrowed money should also strengthen the relationship with existing customers, not only to fund the pursuit of new ones. Improving product quality, customer service, reliability or delivery can encourage repeat purchases and referrals.
For many small businesses, retaining a loyal customer can be more sustainable than continually spending to find a new one.
The Kenya Financial Health Survey reinforces the importance of these habits. It found that financially healthier households are more likely to plan their finances, maintain savings and borrow with a defined purpose rather than rely on credit for recurring daily expenses.
While these findings focus on households, the same principles apply to entrepreneurs. Planning before borrowing, maintaining financial discipline and preparing for unexpected shocks can strengthen both household and business resilience.
Business owners should also resist the temptation to borrow beyond their repayment capacity. Responsible borrowing protects both the entrepreneur and the enterprise.
A smaller loan that can be repaid comfortably, while building a positive credit history, can create greater opportunities for future financing than taking on more debt than the business can sustain.
Ultimately, credit should be viewed as a growth tool, not a solution to every financial challenge.
When combined with disciplined budgeting, accurate record-keeping and a clear investment strategy, a loan can become an engine for steady growth rather than a financial burden.
Kenya's entrepreneurs have repeatedly demonstrated their resilience and determination. The opportunity now is to turn that resilience into sustainable growth.
Borrow intentionally, invest wisely and make every borrowed shilling work harder.
The writer is a senior manager, Growth & Marketing - Tala, Kenya & Expansion Markets
