Middle-class sinking in debt as bills mount

This is the reality of a Kenyan middle-income household

In Summary

• One in every eight middle-income households are servicing debt that is three-quarters greater than their total assets

• One out of three Kenyans would cannot sustain themselves for at least three months if they lose their jobs.

Customers shopping at a supermarket.
Customers shopping at a supermarket.
Image: FILE

John* earns Sh100,000 gross salary per month. After paying taxes, this drops to Sh65,000. Rent, food, clothing, car loan, and leisure takes another Sh50,000.

He is now left with Sh15,000 to bribe traffic officers, fuel his car for the entire month and cater for family emergencies.

This is not enough because he has to borrow from the countless digital lenders to survive.

This is the reality of a Kenyan middle-income household well painted by the report by Economic Co-operation and Development released yesterday.

According to the report, one in eight middle-class homes has amassed debt greater than three-quarters of their total assets.

This means most middle-income households are currently living beyond their means, spending more than they earn as the cost of living and expenses grows at a faster pace than their incomes. This has exposed them to financial vulnerability.

The report shows more than one in three people are economically vulnerable, meaning they lack the liquid financial assets needed to maintain a living standard at the poverty level for at least three months, should they lose their jobs.  

The scenario on the ground may be much worse as Senior Program Officer at Twaweza East Africa Victor Rateng says an internal study carried out by the organization shows 85 per cent of Kenyan homes survive on a monthly income of $400 (Sh40,000).

“The so-called middle class does not exist in Kenya. 70 per cent are what we would call the floating class who are two to three months away from poverty,” he said.

According to the Kenya National Bureau of Statistics, the middle-class person spends between Sh23,670 and Sh199,999 each month.


Rateng added that the working population is struggling due having to cater to a high number of dependents in the family like paying for health services out of their pockets and bowing down to increased social pressures in the society.

“If you are entirely excluded from dependency, you can be very wealthy, but that is not the case in the country.

Although Kenya has been globally lauded for its budding middle-class, the OECD report shows almost a third of the budget of the average middle-income household goes to housing/ rent while food and clothing account for slightly less than a quarter of the budget.

While core goods and services make up more than half of middle-income household spending, they spend on average 12 per cent of their budget on leisure including recreation, culture, hotels, restaurants and alcohol.

“House prices have grown twice as fast as inflation and one-and-a-half times faster than the middle income household’s average income,” the report stated.

Rateng said although Kenya’s working class tries to invest purchasing cars, dabbling in side hustles and putting their money in investment groups such as saccos, they are still trying to live the same lifestyle as the super rich who in most cases acquire their money through dubious means.

 “As the rich get richer, the middle classes spend more and more,” he said. “The Kenyan system has been betrayed by corruption which has contributed significantly to the spiking cost of living.”

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