Report Shows 75% of Kenyans Believe Economy Has Worsened

Recent findings from the Old Mutual Financial Services Monitor show that Kenyans are increasingly uncertain about the economy.

Confidence has dropped significantly since 2023, with only 10% feeling optimistic. Most people (75%) believe the economy has worsened due to rising costs, high taxes, and unemployment.

Income security is a major concern, with 51% of working Kenyans worried about losing their jobs or main income sources. Many are diversifying their income through side businesses and informal work. Despite these efforts, 47% report high financial stress impacting their health.

Job Worries on the Rise

Economic challenges have led Kenyans to cut spending. 26% have moved to cheaper rental homes. Despite financial strain, 85% haven’t changed their insurance coverage, showing caution in uncertain times.

Investment is still important, but people are more cautious. 37% are unwilling to take financial risks, leaning towards conservative strategies. There’s a drop in people cashing in investments early and pausing contributions compared to last year.

“As the OMFSM 2024 reveals, the traditional ways of earning a living or managing household expenses are no longer sufficient. As a result, Kenyans are increasingly finding alternative ways to cope with these economic pressures.

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“Among the most notable shifts for adaptation is the rise of the informal economy. People are starting small businesses, offering services like tutoring, food delivery, or selling second-hand goods, often bypassing formal employment altogether,” said Anthony Mwithiga, Group Managing Director Old Mutual Investment group.

Debt Management

Debt is a big issue, with many relying on loans for daily needs. Mobile loans, Chama loans, and borrowing from family and friends are common. 41% have borrowed to sustain businesses, while others use loans for school fees and medical expenses. Debt takes up 10% of household spending.

Financial stress affects both mental and physical health, with 47% feeling its impact. While medical insurance coverage has risen slightly, high costs remain a barrier for 44% of uninsured respondents.

Despite challenges, Kenyans are committed to saving through SACCOs, Chamas, and mobile money platforms, with 48% saving through informal groups. However, retirement planning is weak. Though 85% recognize its importance, 39% lack confidence in their retirement savings and hope their children will support them in old age.