Day-to-day needs are driving the savings culture by households, amid difficult economic times.
Day-to-day needs are driving the savings culture by households, amid difficult economic times, with 36 percent of Kenyans putting away funds for such purposes and marking the highest ratio in five years.
The growing trend of saving for immediate needs has also seen households cut on saving to cater for education expenses, even as more Kenyans save for emergencies and short-term reasons than for retirement, the Central Bank of Kenya’s Finaccess Household survey 2024 shows.
“The majority, 35.9 percent, save for day-to-day needs, followed by 27.7 percent who save for emergencies. Education needs accounted for 9.9 percent of savings, while 12.6 percent save for retirement,” the Finaccess survey notes.
The number of Kenyans saving in order to meet day-to-day household needs was the highest in five years and increased from 26.4 percent of the population that saved for the reason in 2021, amid harsh economic times that have been marked by high commodity prices in recent months.
The survey notes that more Kenyans are saving money for social reasons such as weddings and paying bride price, than those saving to buy vehicles or boda bodas.
It shows that at least 1.7 percent of Kenyans this year saved in order to cater for social reasons (wedding, bride price), while just 0.2 percent saved to acquire a vehicle or boda boda.
Kenyans saving for emergency needs such as burial and medical expenses were also at a five-year high this year, while those saving for retirement doubled from 2021.
Saving for retirement is the fourth main reason for Kenyans to save, after saving to meet day-to-day expenses, for emergencies and for education, the report notes.
Safe keeping
The survey adds that about 7.5 percent of Kenyans reported saving for business purposes, a slight drop from 9.1 percent of Kenyans who reported business-related savings in 2021.
Another group of 10.1 percent of Kenyans reported to be saving “for safe keeping”.
“A smaller portion, 4.3 percent, save with the goal of purchasing land, property, or house improvement. These findings suggest that the savings culture is primarily driven by immediate needs, with a strong emphasis on day-to-day expenses and emergency preparedness,” the survey notes.
The survey shows that while overall savings have dropped to a 15-year low of 68.1 percent as biting economic hardships leave more households afford to only meet day-to-day needs, and save more for short-term reasons.
The Finaccess survey notes that more Kenyans (51.9 percent) prefer saving through formal institutions, though women are considered to use informal channels more than men.
“A similar trend is observed in savings, with 29.5 percent of women using informal savings compared to 17.3 percent of men. This may be due to women’s involvement in informal financial networks, such as savings groups or chamas, which offer greater flexibility, social support, and accessibility,” the survey notes.
