Kenyan Workforce Navigates Economic Headwinds with Entrepreneurial Spirit
A significant portion of Kenya’s working population is actively seeking to bolster their earnings, with three in ten individuals reporting an increase in income compared to the previous year. This upward financial momentum is largely attributed to the proliferation of side hustles and entrepreneurial ventures. However, these gains are being significantly offset by a growing dependency ratio, where fewer working individuals are supporting a larger number of non-working dependents.
This emerging trend is highlighted in the latest Financial Wellness Monitor, a comprehensive study conducted by Old Mutual Group. The survey, which sampled employees aged between 20 and 59 years old from October to December of the past year, provides a detailed snapshot of the financial landscape for Kenyan workers.
The Rise of the “Poly-Jobber”
The report reveals a notable increase in individuals juggling multiple employment streams. Currently, 26 per cent of working Kenyans identify as “Poly-Jobbers,” meaning they are engaged in multiple jobs or part-time work. This represents a substantial rise from the 20 per cent recorded in the previous year’s survey. Strikingly, at least a quarter of these “Poly-Jobbers” are now earning more from their supplementary income streams than from their primary, formal employment.
This surge in supplementary work aligns with the broader growth of Kenya’s gig economy, which is estimated to be worth a substantial $1.02 billion (approximately Sh130 billion) and supports around 1.55 million gig workers. The primary drivers of this vibrant gig economy are e-commerce, which accounts for 42 per cent of the market, and ride-hailing services, contributing 20 per cent.
The Shadow of Rising Costs and Expanding Responsibilities
Despite the entrepreneurial drive and increased earning potential, many working Kenyans are experiencing persistent financial strain. The escalating cost of living, coupled with mounting debt and an expanding web of financial obligations, is eroding the benefits of these additional income streams.
A significant finding of the study is the prevalence of the “sandwich generation,” where 46 per cent of working Kenyans are simultaneously supporting both their children and adult dependents. The primary adult dependents are often parents, cited by 79 per cent of respondents, followed by siblings, at 49 per cent. The number of working Kenyans supporting adult dependents has seen a four percentage point increase in the current survey period.
To cope with these mounting pressures, beyond taking on more jobs and expanding businesses, many Kenyans are increasingly resorting to borrowing to cover their daily expenses, including what is commonly referred to as “black tax” – financial obligations to extended family members.
Borrowing and Budgeting Challenges
The Financial Wellness Monitor indicates that 40 per cent of working Kenyans are borrowing money to meet their everyday expenses. Furthermore, a concerning 54 per cent of respondents are carrying the same or a higher debt burden compared to the previous year, with a significant 46 per cent regularly exceeding their allocated budgets.
Vuyokazi Mabude, Head of Knowledge and Insights at Old Mutual, commented on these findings, stating, “The report paints a picture of a nation in transition. Kenyans are resilient and entrepreneurial. But without stronger support in financial literacy, savings discipline, retirement planning, and protection, this progress risks remaining short-term.” She also noted a discernible shift from passive financial behaviour towards a more active financial intent among the population.
This perspective is echoed by Tabitha Njuguna, a Faculty Member at Strathmore University Business School, who emphasizes that while Kenyans are demonstrating increased effort and goal-setting, they require the right tools, advice, and protective measures to convert their resilience into enduring financial security.
Factors Contributing to Financial Dissatisfaction
Those who reported dissatisfaction with their financial situations primarily cited several key factors:
- The persistently high cost of living.
- Incomes that are insufficient to cover essential expenses.
- Difficulties in securing better-paying employment opportunities.
- Limited access to capital for business expansion.
The study also highlighted an increase in individuals falling behind on their financial commitments. The percentage of those who had fallen behind on rent rose from 17 per cent to 25 per cent. Similarly, the number of individuals who dipped into their savings to make ends meet increased from 35 per cent to 40 per cent. In terms of household bills, those who fell behind also saw a slight increase, from 27 per cent to 28 per cent.
Adaptive Strategies Amidst Cost Pressures
In response to the escalating costs, working Kenyans are actively implementing adaptive strategies. As noted by Vuku, an investment analyst at Old Mutual Investment Group, these adjustments include:
- Trading down to more affordable housing options.
- Switching to lower-cost consumer brands.
- Revising mobile phone plans to manage expenses more effectively.
In some instances, households are making more significant decisions, such as moving children to less expensive educational institutions, underscoring the profound impact of cost pressures on everyday financial decision-making.
Savings and Vulnerability
Regarding savings, the Monitor found that 40 per cent of the population has taken out a loan specifically for day-to-day expenses. Mobile loans continue to be the most frequently utilized form of credit, closely followed by personal loans obtained from “Chamas” (informal savings and investment groups).
Encouragingly, over half (53 per cent) of consumers report having sufficient savings to cover at least three months of expenses. This figure represents an increase of nine percentage points since the previous year. However, this also means that four in ten individuals remain vulnerable, with the potential to exhaust their savings in less than three months without any income.
Signs of Optimism and Resilience
Despite the challenges, the survey data points to a growing sense of resilience and adaptability among employed Kenyans in the face of economic pressures. More individuals are actively creating additional income streams, expanding their existing businesses, and expressing a generally optimistic outlook regarding their financial prospects.
Financial satisfaction has seen an improvement, rising from an average score of 5.2 out of 10 in the previous year to 5.9 in the current assessment. A substantial 70 per cent of respondents anticipate their financial situation will improve over the next six months, attributing this optimism to a perceived improvement in the macroeconomic environment.
The Old Mutual Financial Wellness Monitor delves into detailed insights into behavioural patterns and sentiments, covering everything from daily financial decisions and risk management to the pursuit of long-term financial objectives. This focus aims to provide a comprehensive understanding of how individuals are navigating their path towards greater financial well-being.
This optimism is further bolstered by broader behavioural shifts, with an impressive 91 per cent of Kenyans now reporting that they have a defined savings goal.
Key Drivers of Financial Well-being
The study identifies several key factors that contribute to an individual’s overall financial well-being:
- A sense of comfort and security regarding one’s financial position.
- Prudent and effective debt management strategies.
- The consistent ability to save money.
- Improved business performance compared to the preceding year.
Arthur Oginga, CEO of Old Mutual Group, commented on this proactive approach, stating, “Kenyans are not waiting for the economy to improve. In the face of economic pressure, they are actively engineering their own recovery, adapting, innovating, and finding new ways to improve their financial position.”
Adding to the positive outlook, the report notes a downward trend in financial stress levels. Currently, 43 per cent of employees report experiencing overwhelming financial stress, a decrease from 45 per cent in the previous year and 48 per cent in 2023. This suggests that while financial challenges persist, the burden of stress may be gradually easing for some segments of the workforce.
