Nearly half of Kenyans have reported financial stress amid income stagnation since 2019, forcing many to live on debt as the economic situation worsens, a new survey shows.
The Financial Services Monitor by Old Mutual Group reveals that about five out of 10 (48 per cent) Kenyans feel overwhelmingly or highly stressed by their financial situation, with lower-income earners and women feeling much more stressed.
Informal sector workers, who take home less than Sh20,000 monthly, are the most stressed, with 51 per cent of them saying they’re overwhelmed, compared to 46 per cent of those taking home more than Sh50,000 monthly.
This is against a backdrop of 62 per cent of Kenyans saying their incomes have reduced compared to their pre-Covid earnings and 29 per cent continue to earn the same amount, despite the high inflation and currency depreciation that have eroded consumer purchasing power.
“This means that the majority of these consumers currently have less money in their pockets than they did prior to being impacted by the pandemic,” states the report published on Monday.
Based on the survey, several Kenyans fall in the “sandwich generation”, meaning that they have both their children and elderly parents relying on them financially, increasing the economic burden on the working class and heightening the stress.
Currently, about 75 per cent have children dependants, while 58 per cent have elders relying on them. Generally, about 46 per cent of Kenyan adults are currently taking care of both their children and their parents, the survey shows.
“The sandwich generation is growing because of two trends; first, life expectancy has moved up, so people are looking after their parents long into their own retirement. Secondly, the children are not getting independent fast enough,” said Nanzala Mwaura, chief growth officer at research firm Ipsos.
The financial stress could be brewing a significant health crisis in the country, with over two-thirds of those feeling highly or overwhelmingly stressed by their financial situation saying the stress is taking a toll on their physical and mental health, yet many are not covered by any insurance scheme.
Nairobi residents take a nap at Jevanjee Gardens along Moi Avenue. Informal sector workers are the most stressed, with 51 per cent of them saying they’re overwhelmed.
Photo credit: File | Nation Media Group
According to the research, the financial stress is pushing many Kenyans deeper into debt and reshaping priorities, and several are not planning adequately for retirement and emergencies.
Over the last year, at least 41 per cent of Kenyans had to borrow from friends and family to make ends meet, while about 38 per cent had to dip into their savings to pay their bills.
While the majority (40 per cent) of those taking loans from different sources are doing so to stock or equip their businesses, about 38 per cent are borrowing to meet everyday needs and 33 per cent do it to meet unexpected expenses like school fees, medical needs, and household repairs.
At the same time, paying debt is now the third most important financial priority for Kenyans, coming after job or income security and cutting expenses. According to the survey, about 17 per cent of indebted Kenyans are struggling to service their loans, and some are now borrowing to repay debt.
About 74 per cent of Kenyans are also not saving for retirement, even though over 80 per cent acknowledge that it is important. Less than 50 per cent believe that their children will take care of them in old-age, while 14 per cent think the government will take care of them.
The hard economic times are also encouraging the gig economy, with about 22 per cent of Kenyans now turning to side hustles, contract work and second jobs to supplement income.
On the flip side, Kenyans are increasingly appreciating the importance of saving, with emergency savings emerging as the sixth most important financial priority. Majority of people aged below 30 are saving to start a business, while older Kenyans are saving mostly for their children’s education.
