Kenyans in their majority are increasingly postponing decisions to take up insurance, save, or invest due to stagnated income streams, according to an inaugural financial services monitor report by Old Mutual Group.
- 9 out of 10 Kenyans earn less than or the same as before the Covid-19 pandemic period.
- The report further highlights that satisfaction levels with current household income are poor with just one in 10 being satisfied except for higher income earners.
- Income streams for Kenyans have remained constant, against rising expenditures due to high inflation rates, the Old Mutual Report says.
“Due to this and the challenging macroeconomic environment, Kenyans’ confidence in the economy is very low at only 16 percent,” said Old Mutual Group CEO Arthur Oginga. The report also highlights dependents as another contributing factor to Kenyans facing financial stress and postponing other crucial financial decisions.
It says three out of four working Kenyans have children, with the majority under 12. 58 percent have adult dependents, mainly their parents, who rely on them financially. “Overall, 46 percent 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 percent of Kenyans borrowed money from family or friends. One in four borrowed from Chamas, while some 38 percent used their savings to sustain themselves.”
- The most prevalent formalized credit used includes credit cards at 34 percent (mostly taken up by those formally employed), personal loans from Chamas at 25 percent, and personal loans from friends/family at 24 percent.
- About 37 percent 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.
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.
“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.
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