Many working Kenyans, including those with seemingly comfortable salaries, struggle to make ends meet and accumulate savings. For instance, a Nairobi employee earning around Sh45,000 a month has to prioritize rent, food, transport, and debt repayments, often leaving little to no savings. This experience is shared across different income groups, highlighting a paradox in Kenya's financial transformation.
Despite having one of Africa's most extensive financial access ecosystems, access to financial services has not necessarily translated into financial security for Kenyans. The latest FinAccess Household Survey reports that 84.8% of adults have formal financial inclusion, but only 18.3% are classified as financially healthy. This indicates that having access to financial services does not guarantee financial stability.
The survey also reveals a decline in the proportion of adults reporting savings, from 74% in 2021 to 68.1% in 2024. Conversely, the share of adults using credit has increased from 60.8% to 64%. This suggests that more Kenyans are relying on credit to meet their financial needs rather than accumulating savings.
Experts emphasize that financial inclusion should be measured by more than just access to financial services. It should also consider the ability to meet daily needs, absorb financial shocks, and invest for the future. TransUnion Kenya CEO Morris Maina stresses the importance of visibility in financial inclusion, which involves capturing the right signals and interpreting them accurately.
The Central Bank of Kenya reports that only 25% of adults could access emergency funds within three days in 2024, a slight improvement from 17% in 2021. However, this improvement is largely driven by greater access to credit rather than accumulated savings. The source of emergency money has also shifted, with a decline in reliance on bank savings and an increase in alternative sources such as family, informal lenders, and Saccos.
Financial experts argue that Kenya's financial system is effective at providing liquidity, but it may not be helping households build enough wealth to need that liquidity less often. Octagon Africa Financial Services founder Fred Waswa suggests that the better test of financial wellness is whether a household has enough accessible savings to cover essential expenses for at least two months without borrowing or missing payments.
The experts recommend building an emergency fund in an accessible account or money market fund, alongside regular pension contributions, to protect both short-term stability and retirement savings. They also note that Kenyans save in various forms, including bank accounts, mobile wallets, Saccos, and pension schemes, so a bank balance alone does not measure total savings.
Key points
- Only 18.3% of Kenyan adults are classified as financially healthy despite high access to financial services.
- The proportion of adults reporting savings has declined from 74% in 2021 to 68.1% in 2024.
- Many Kenyans rely on credit to meet their financial needs rather than accumulating savings.
