A new report by Old Mutual reveals that 70% of Kenyans saw a decline in their incomes in 2024, with nearly half (47%) of the country’s working population reporting significant stress, including physical and mental health impacts.
The second edition of the Old Mutual Financial Services Monitor (OMFSM), launched today in Nairobi, explores the financial wellbeing of employed Kenyans, focusing on urban and peri-urban adults aged 20 to 59, and earning KES12,000 or more, who represent approximately 63% of the country’s population aged 15 to 64.
The findings paint a concerning picture of financial insecurity, with a majority of Kenyans expressing diminished confidence in the economy. While some consumers were optimistic in 2023, many have adopted a more neutral stance this year. Key factors contributing to the decline in confidence include high living costs, taxes, rising food prices, unemployment, and a difficult business environment. As a result, only 3 in 10 Kenyans report that their household income consistently covers all expenses with money left over at the end of the month.
In response to these financial challenges, many Kenyans are becoming more cautious with their spending. They are downsizing their living arrangements, opting for cheaper brands, moving children to more affordable schools, and cutting back on discretionary expenses such as dining out, entertainment, and travel.
To supplement their incomes, many are turning to entrepreneurship. The OMFSM 2024, confirms that half of Kenyans now own a business, with 30% of these ventures formally registered. However, only 16% of these businesses are insured, leaving them vulnerable. Additionally, most entrepreneurs rely on personal savings, business profits, and loans from savings groups (Chamas) to fund their businesses.
“As the OMFSM 2024 reveals, the traditional ways of earning a living or managing household expenses are no longer sufficient. As a result, Kenyans are increasingly finding alternative ways to cope with these economic pressures,” said Anthony Mwithiga, Group Managing Director Old Mutual Investment group.
“Among the most notable shifts for adaptation is the rise of the informal economy. People are starting small businesses, offering services like tutoring, food delivery, or selling second-hand goods, often bypassing formal employment altogether”.
Meanwhile, despite increasing financial struggles, Kenyans are prioritizing their long-term financial security. Eighty-five percent acknowledge the importance of saving for retirement, and the number of consumers saving for the future has increased—rising from 26% in 2023 to 36% in 2024. However, confidence in having enough for retirement has significantly dropped, from 12% last year to just 7% in 2024. Those saving for retirement primarily use employer pension schemes, savings groups, or personal investments.
The report highlights the ongoing financial pressures facing Kenyans, emphasizing the need for better economic stability and financial planning as the country navigates the prevailing challenging times.
“While the economic hardships may continue, it is clear that the drive for survival and success remains strong, with individuals constantly innovating and finding new ways to thrive amidst adversity,” noted Mwithiga.
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