More Kenyans now live hand to mouth and have foregone key financial choices such as insurance, savings and short-term investments.
Stagnated income streams has taken a toll on their financial decisions making expenditure becomes more inconsistent, according to financial services group Old Mutual.
In a report launched on Wednesday, it says nine out of 10 Kenyans currently earn less than, or the same as they did prior to Covid-19, leaving a majority of them with less money prompting financial stress.
The Group says satisfaction levels with current household income are poor, with just one in 10 being satisfied.
However, this is with an 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.
He spoke at the firm’s inaugural financial services monitor launch in Nairobi.
The report says dependents further contribute to Kenyans’ financial stress, impacting their saving and investment decisions.
It says three out of four working Kenyans have children, with majority being less than 12 years old.
Close to 58 per cent have other adult dependents that rely on them financially, and these are mainly their parents, states the report.
“Overall, 46 per cent are a part of the sandwich generation (financially taking care of both children and adult dependents),” it adds in part.
This trend has seen majority of households opt for debt to make ends meet, according to the report.
“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 include credit cards at 34 per cent (which are 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 made use of their mobile money accounts to take out a loan, the report adds.
As a result, paying off debt has become among the top three financial priorities amongst Kenyans.
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 on them.
Noting that about 88 per cent of Kenyans do not have financial advisers, he advises that consumers need the guidance besides the basic knowledge to make the right decisions.
“The journey to being financially well in current economic time begins with the right advice from the right people,” Mwithiga said.
