Half of Kenyans are living in debt - Report
Nearly six out of
10 Kenyans are living in debt according to a new report on financial health and
inclusion by consultancy firm Deloitte.
The report which
points to deteriorating financial health among Kenyans against an increase in
the uptake of formal financial services shows only 45 per cent of individuals
are balancing income and expenses every day.
According to the
report, while financial inclusion has hit a high 83.7 per cent as of 2021 from
75.3 per cent in 2016, financial health has hit a low 17.1 per cent from 39.4
percent in the same period.
Only three of 10
Kenyans or 28.3 per cent are able to cope with emergency spending needs while
only four in 10 Kenyans have the ability to make future investments.
The report describes
financial health as the extent to which someone is able to meet all their
current commitments and needs and have the resilience to maintain this in the
future.
Further, the report
breaks down factors related to Kenyans ill-health including costly banking and
digital payments, lack of knowledge on financial management and credit &
debt.
“According to FSD
Kenya, digital loans in Kenya are the most recurrently used loan behind social
network and money-lender loans, Moreover, those with existing loans are over-indebted or struggling to pay,” notes the report.
The low penetration
of insurance, savings and investment products has also been tied to the
deteriorating financial health of Kenyans.
Insurance products
have been viewed as costly and out of reach while many Kenyans lack money to
save from irregular income while others cite the lack of suitable products to
save and invest in small sums.
Deloitte recommends accelerating the interoperability of payment systems to cut transaction
costs and consumer financial laws to manage Kenyans indebtedness as part of the
cure to the financial ill-health.
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