Standard Chartered Bank official has urged Kenyans to go beyond mere saving of cash and diversify their investments.

The banks Head of Wealth Management, Paul Njoki said there is need to invest for the future,  arguing that saving cash does not cover longer lifespan and new priorities. He asked the affluent to invest for the long term.

“Kenyans need to take charge of their finances and build diversified investment portfolios to meet their new goals, including a comfortable and timely retirement,” said Njoki. 

He added that 95 per cent of those who have made five or more changes to their portfolios following the outbreak of Covid pandemic are happier with their finances.

Njoki’s sentiments came amid a new study indicating an ongoing paradigm shift in investment, stimulated by the pandemic which has rattled financial markets, creating low confidence.

The survey by Standard Chartered Bank was conducted between June and July 2021, and sampled emerging affluent and high net worth (HNW) consumers in 12 markets across Asia, Africa, the Middle East and UK. Kenya had a HNW sample of 1598. 

The study reveals that the affluent need new strategies to grow their wealth, which often involves more proactive investments rather than just saving cash.

Confidence gap

“Their current ‘confidence gap’ has made many increasingly averse to risk, potentially stopping them from putting their money to work through investing or making use of digital tools that simplify wealth management,” it says.

It adds that volatility in financial markets, fear of poor returns on investments and insufficient information about specific investment opportunities are the three common factors that impact confidence across wealth spectrum at 38 per cent, 37 per cent and 32 per cent respectively.

Ken Gichinga, the chief economist at Mentoria Economics likened the confidence gap to a classic case of the chicken coming home to roost.

He said years of the state crowding out the private sector through debt refinancing of infrastructure projects is a disincentive factor which has led to investors opting for the less risky government bonds.

“Business is like a sport. If you don’t practice it, you lose confidence,”he said in reference to lack of encouragement to investors by authorities to expand their investment portfolios.

A classic case of this investment conservatism is that of 23 years old artist Ann Njuhi, who last week won Sh1 million for redesigning Kenya Breweries Limited corporate logo.

When asked how she intends to use the money, she said she would invest in government paper.

The survey indicates that 96 per cent of affluent Kenyans have set new post-pandemic goals, though they are not taking actions that can actualise their decisions.

Children’s future

It shows that the pandemic has prompted affluent Kenyans to focus more on their future with 57 per cent of the sample, saying they want to improve their health and an identical number rooting to secure their children’s future, as well as early retirement plans.