- Income streams for Kenyans have remained constant, against expenditures becoming more inconsistent.
- Nine out of 10 Kenyan consumers earn less than or the same as before Covid-19.
- The report further highlights that satisfaction levels with current household income are poor with just one in 10 being satisfied with the exception of higher income earners.
Financial distress with declining income streams for Kenyans
More people are increasingly foregoing important financial services such as insurance, savings, and short-term investments on the back of stagnated income streams.
According to Old Mutual’s inaugural financial services monitor report, a focus on Kenya shows nine out of 10 Kenyan consumers are earning less than or the same as before COVID-19, as the situation prompted financial stress due to less money in their pockets.
This is as expenditure becomes more inconsistent against a consistent income stream, the firm says in part.
Old Mutual Group is a premium African financial services group that offers a broad spectrum of financial solutions to retail and corporate customers across key markets in 14 countries.
The Group operates in Kenya, Uganda, South Sudan, Rwanda, and Tanzania in East Africa.
With the launch of the first-ever financial study report, the Group seeks to revitalize the financial landscape in its member countries.
This empowers individuals, businesses, and policymakers by offering resources to make informed decisions.
Dubbed ‘Old Mutual Financial Services Monitor (OMFSM)’, the study generally seeks to provide comprehensive insights into the financial market.
Further, focus on Kenya, the report highlights that satisfaction levels with current household income are poor with just one in 10 being satisfied with the exception of higher income earners who are slightly more satisfied.
“Due to this and the challenging macroeconomic environment, Kenyans confidence in the economy is very low at only 16 per cent,” Group CEO Arthur Oginga said.
The report also highlights dependents as another contributing factor to Kenyans’ financial stress impacting their decisions.
It says three out of four working Kenyans have children, with the majority under 12. 58 per cent of other adult dependents, mainly their parents, rely on them financially.
“Overall, 46 per cent are a part of the sandwich generation (financially taking care of both children and adult dependents),” the report reads.
According to the Group, this trend has seen the majority of households opting for debt to try and make ends meet.
“Over the last year, about 41 per cent of Kenyans borrowed money from family or friends. one in four borrowed from Chamas, while some 38 per cent used their savings to sustain themselves.”
The most prevalent formalised credit used includes credit cards at 34 per cent (mostly taken up by those formally employed), personal loans from Chamas at 25 per cent and personal loans from friends/family at 24 per cent.
About 37 per cent used their mobile money accounts to take out a loan, the report adds in part.
As a result, paying off debt has become among Kenyans’ top 3 financial priorities,” said Oginga.
To address this growing challenge, Old Mutual Investment Group managing director- Anthony Mwithiga said Kenyans need to engage more financial advisers in the current tough economic environment to cushion them from the financial stress that is taking a physical and emotional toll.
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He said about 88 per cent of Kenyans do not have financial advisers, and he advises that consumers need guidance besides basic knowledge to make the right decisions.
“The journey to being financially well in current economic time begins with the right advoce from the relevant people,” Mwithiga said.
Kenyans saving landscape against stalled income
When it comes to savings, the report says 22 per cent of working Kenyans make use of SACCOs.
Chamas are also popular with 44 percent incidence.
“The Saccos and chamas are mainly used for saving towards education costs, buying property and business needs,” the report reads.
Starting a business is Kenyans’ second highest savings goal, driven by those under 50 years old.