Kenyans with disposable income are increasingly prioritizing savings, with savings in Kenya accounting for approximately 13.0% of the Gross Domestic Product over the last five years.
According to a recent study conducted by Trends and Insights for Africa (TIFA), they predominantly opt for investment accounts as the preferred means to safeguard their hard-earned money.
The primary motivation for those with the capacity to save, at 19.0%, is to accrue interest through bank accounts. This finding underscores the growing awareness among Kenyans regarding the importance of financial security and growth through prudent saving and investment decisions.
Emergency preparedness follows closely behind, with 16.0% of respondents citing it as a key reason for setting aside their earnings. Additionally, education and home-related expenses, including house construction or purchase, serve as strong motivators, with 15.0% and 11.0%, respectively. Kenyans are evidently forward-thinking, recognizing that savings can pave the way for better educational opportunities and homeownership.
The survey also highlights that 8.0% of respondents are saving for business development, while another 8% are focused on acquiring livestock. Family plays a significant role, with 7.0% of Kenyans saving to support their loved ones. An additional 5.0% are looking to purchase land, while 4.0% are saving for household or personal needs. Interestingly, 1.0% of those surveyed are unsure of their specific savings goals, indicating the need for financial education and guidance.
The research conducted by Trends and Insights for Africa (TIFA), comprising computer-assisted telephonic interviews with 1,500 respondents, not only explored the state of the Kenyan economy but also delved into aspects of the recently passed FY2023/24 budget, including the contentious housing levy. This comprehensive approach offers valuable insights into the broader financial landscape of the nation.
One striking revelation from the survey is the relationship between monthly income and the ability to save. Surprisingly, 28.0% of those in the lowest income category report being able to save, while only 50.0% of those in the highest income category claim to do so. This suggests that financial literacy and the importance of saving transcend income levels, underscoring the need for accessible financial education and resources.
The survey also examined the cooking fuel preferences of Kenyan households, revealing a significant shift over the past six years. Over the last decade, Kenya witnessed a remarkable surge in the annual usage of cooking gas, with consumption increasing to 371,400 tonnes in 2022, a substantial rise from the 92,900 tonnes in 2013, as reported in the 2019 Kenya Housing and Population Census. This transformation may be further accelerated by the recent implementation of an 8.0% Value Added Tax (VAT) on liquefied petroleum gas (LPG) as per the Finance Act 2022, a decrease from the previous 16.0%. Such changes highlight Kenyan households’ adaptability and responsiveness to economic shifts, emphasizing the importance of staying informed and making informed financial decisions.
The growing inclination among Kenyans with disposable income to save and invest is a promising sign for the country’s financial future. Interest in earning from bank accounts is just the tip of the iceberg; individuals are prioritizing their financial security, education, homeownership, and business development. The correlation between income and saving capacity suggests that financial literacy is the key to bridging the savings gap.
As the financial landscape continues to evolve, the significance of staying informed and making prudent financial decisions becomes more apparent. Kenyans are showing that they are not only resilient but also adaptive to economic changes. The shift towards savings and investments is a testament to their commitment to a brighter and more secure financial future.
