Old Mutual unveiled its financial service monitor on February 7 at the Radisson Blue in Nairobi, with a report painted a daring picture of the economic struggles faced by Kenyans, revealing that 48% are grappling with financial difficulties.
The financial service monitor report compared the economic situations in three countries – Kenya, Namibia, and Ghana.
Among these, Kenya ranked the lowest in terms of citizens’ confidence in their financial well-being and that the current government can’t help take care of their pension, with a score of 84%. Ghana followed closely at 17%, while Namibia led the pack at 24%.
In contrast, in light of adult dependency, 71% of parents in Namibia believe they will be taken care of by their children upon retirement, compared to 58% in Kenya and 53% in Ghana.
Constrained Earnings Among Kenyans
Nine out of ten Kenyans earn the same or less than they earned before the coronavirus pandemic, indicating a decrease in their purchasing power.
Additionally, four out of ten Kenyans are borrowing to make ends meet, primarily from family and friends, and one in four are borrowing from Chamas.
“Family and friends are the key banks for Kenyans during these harsh economic times,” said Arthur Oginga, Group CEO at Old Mutual.
Despite the rampant inflation that has left the majority of Kenyans living hand-to-mouth, Oginga said Kenyans have shown a resilient spirit in the entrepreneurial sector, with 54% owning a micro-business.
This resilience is also evident among the poly jobbers or better known ‘hustlers’, who are earning additional income over and above their regular jobs.
In the formal sector, 63% of Kenyans believe in income security, which Anthony Mwithiga, Old Mutual Investment Group Managing Director, identified as a key priority.
In the face of persisting economic hardships, many Kenyans have resorted to cutting expenses (58%) and prioritizing debt repayment (41%).
Only 34% believe in investing for their future.
Where Kenyans Borrow the Most
Mobile money loans lead the way in formalized debt among Kenyans, accounting for 37%.
This comes as Kenyans grapple with the weakening shilling, which has shed 22% of its value against the dollar since March 2022.
Bank loans follow at 34%, then personal loans from Chamas at 25%.
Personal loans from family and friends stand at 24%, while microfinance institutions trail at 11%.
The report reveals that Kenyans are primarily taking personal loans to buy stock for their businesses (40%) and to cover day-to-day expenses (38%).
Old Mutual unveiled the inaugural Financial Services Monitor to Guide the enhancement of financial well-being in Kenya.
