Kenya is undergoing a big transformation as more people turn to entrepreneurship due to instability in formal employment. A new 2025 Money March report by digital lender Tala shows this shift, with full-time employment going down while business ownership is up.
Full-Time Employment Down
According to the report, full-time employment in Kenya has gone down from 57% in 2023 to 50% in 2025, the downward trend in job security. With increasing statutory deductions and rising cost of living, many are looking for alternative ways to earn a living.
But while entrepreneurship is growing, side hustles among employed individuals have gone down from 40% in 2023 to 20% in 2025. This decline means financial constraints are making it hard for employees to invest in secondary income sources.
Entrepreneurship in Kenya
The report also shows a 7% increase in business ownership, from 19% in 2024 to 26% in 2025. This means more Kenyans are starting their own businesses as a survival strategy. Teddy Kahiro, Tala’s Country Manager for User Research has concerns about this trend, saying it means the job market is not stable in the long term. He says entrepreneurship offers financial freedom but also reflects an economy where formal employment opportunities are shrinking.
Financial Struggles and Coping Mechanisms
The cost of living is still a major challenge for many households, with 92% of surveyed Kenyans saying the rising expenses have affected their budgets. As a result, people are cutting back on non-essentials and looking for ways to be financially stable.
- 51% of respondents have started a business to cope with financial pressure.
- 46% are taking loans, with 38% borrowing from digital lenders and 8% from banks.
- 57% of salaried employees have nothing left after paying basic expenses, meaning they live paycheck to paycheck.
- 59% have reduced their expenses to manage the rising cost of living.The entrepreneurial wave in Kenya shows we are resilient in the face of economic uncertainty. But it also raises questions about the job market and sustainability of these new businesses. The decline in side hustles among employed individuals means many can’t invest in secondary income sources and are tightening their household budgets.
Going forward, policymakers and financial institutions should support small businesses and self-employed individuals with affordable credit, business development programs and tax incentives. This will be key to making entrepreneurship a long-term solution not just a short-term coping mechanism.
As Kenya navigates these financial challenges, the shift to business ownership could redefine the employment structure. But unless we do systemic economic reforms, the decline in full-time jobs will mean more instability in household incomes and overall economic growth.
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