Households saving less than 20% of income as inflation bites

Old Mutual's Financial Services Monitor shows 60% is allocated to living expenses.

In Summary
  • The average saving rate in Kenya stands at 12%, far below the continent's average of 17%
  • At least 12% goes to debt repayments

Households in Kenya are saving less than Sh2 from every Sh10 earned, an aspect attributed to the rising cost of living.

This is likely to sink further the country's saving culture which is already below those of peers in East Africa. 

The average saving rate in Kenya stands at 12 per cent, far below the continent's average of 17 per cent. 

According to the Old Mutual Financial Services Monitor (OMFSM) released today, 60 percent of household income is allocated to living expenses, 12 per cent to debt, and one-fifth to savings.

The survey by Old Mutual while blaming this on several social economic shifts that have happened in the past five years, singles out the impact of the Covid-19 pandemic on earnings, with nine out of 10 Kenyan consumers (91% women; 90% men)experiencing stagnant or decreased income levels.

This survey complements a similar study by the Kenya Institute for Public Policy and Research (KIPPRA) released last year that shows households in Kenya allocate roughly one-third of their expenditure to food and non-alcoholic beverages.

Housing, water, electricity, gas, and other fuels constituted the second main category of consumption, accounting for around 14.6 per cent of the household budget.

Transport followed, with households devoting nearly 10 percent of their total spending on goods and services to this category.

These statistics contradict the government's data on the cost of living in the country, which is said to be on a decrease mode.

Inflation dropped to 6.3 per cent in February, following January's 6.9 per cent.

February's result marked the weakest inflation rate since March 2022.

The moderation was chiefly driven by slower growth in prices for food and non-alcoholic beverages, and. In addition, price pressures for housing and utilities

The indicator measures price variations in goods and services compared to the same month one year earlier. In February 2022, inflation in Kenya stood at 9.2 percent.

The second edition of the report by the diversified financial firm offers invaluable insights into the financial behaviors and attitudes of Kenyans, with a particular focus on women.

It provides a comprehensive analysis of the Kenyan economy, touching on key trends and challenges faced by individuals, especially women.

“The report comes in the wake of Internationalwomen’s Day, which is focusing on the economic empowerment of women to accelerate gender equality,” said Anne Nyamu, Patron of Old Mutual Women’s Network.

The majority of women in Kenya are under financial strain, with only 16 per cent confident about the country's economic growth. 

The Old Mutual Financial Services Monitor (OMFSM) released today shows 54 per cent are undergoing significant financial stress, a figure notably higher than their male counterparts, standing at 41 per cent. 

To cope with financial pressures,41 percent of Kenyan women have tapped into their savings, while 30 percent have resorted to borrowing from savings clubs (chamas).

Despite these challenges, there remains a beacon of optimism, as almost three-quarters of Kenyan women believe their financial situation will improve in the next six months.

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