This archive report was first published on 26 August 2019.
Kenya's economy has experienced steady growth over the past four years, averaging five percent per annum. However, this growth has been overshadowed by a decline in corporate profits, stagnation in workers' incomes, and a series of employee retrenchments that have slowed down small businesses.
According to a survey conducted by Infotrak, seven in every ten Kenyans who have access to formal banking services spend more money than they make each month, putting them in a state of permanent indebtedness.
Infotrak's research, which involved face-to-face computer-assisted personal interviews with bank customers in Nairobi, found that 70 percent of banked Kenyans consider themselves to be in debt and living beyond their means.
"A significant proportion of the Kenyan population is experiencing severe debt distress," says Infotrak in the report.
The survey also revealed that Kenyan families feel unprepared for a financial emergency, fearing that they would plunge into poverty in case of sudden economic shocks such as loss of job or sickness.
"Most middle-income households are currently living beyond their means, spending more than they earn as the cost of living and expenses grow at a faster pace than their incomes do," says the study.
Infotrak's research also highlighted the growing use of Financial Technology (Fintech) platforms, with about six out of 10 Kenyans with bank accounts using these platforms.
The survey linked debt distress by Kenyans mainly to lack of consumer awareness, stacking loans from different lenders, and defaulting on repayment, leading to negative listing by Credit Reference Bureaus (CRBs).
"There is a growing sense in which the crisis precipitated by the negative listing by CRBs of defaulters now requires immediate legal and policy interventions," says the survey.
Published on August 26, 2019.
