Why most Kenyan adults struggle to manage finances
By Steve Umidha, December 6, 2022
Half of Kenyan adults are not financially cultured and lack relevant investment knowledge on suitable products for those willing to save and spend small sums, according to a financial expert.
This is despite the supposed growth in the formal financial inclusion in the country, which is believed to have doubled over the last decade, primarily mobile phone proliferation and the increased popularity of mobile money services.
Brian Myers, the Chief executive of the financial trading brokerage firm, Equiti Group said that the majority of adults still need help not only in managing their day-to-day finances but also in long-term investment planning as the cost of living and runaway inflation continue to plunge millions of Kenyan household budgets into the red.
“What we are realising in Kenya and across the world is that the youth completely over-estimate the short-term and long-term investments in the stocks market, for instance, so what we are asking them is to start thinking about their future and begin to take up financial literacy programs to stay abreast of available investment opportunities around them,” he added.
This comes amid concerns that the recently unveiled Hustler Fund – a State-backed digital financial inclusion initiative designed to improve financial access among small traders, risks running into challenges with the majority of those applying for such loans said to be deficient in the financial literacy awareness on how to invest the borrowed amounts and repayment ramifications. “From those, we have talked to, about 330,000 youths through our financial literacy programme, we are already seeing a positive shift since we launched the initiative three years ago,” said Myers.
Financial literacy
He noted that the urgency to improve financial literacy levels for wealth empowerment among Kenyans was the sole motivating factor to pioneer the financial literacy programme, run through Fx-Pesa and powered by EGM Securities Limited which is part of Equiti Group.
A recent report by audit firm Deloitte found that only 2.9 per cent of Kenyans rely on formal financial institutions for advice, compared to 88.3 per cent who rely on themselves and their friends and family.
On Savings and Investments, the report dubbed, Beyond financial inclusion further finds that 54.6 per cent of Kenyans lack enough money to save, 18.4 per cent lack regular income and 34.9 per cent don’t have the kind of money to invest.