Kenyans crossed into 2019 optimistic to the realization of their New Year’s resolutions. Among them, financial independence despite 2018 being the most economically challenging year. December hit the highest inflation rate of 5.7%. However, these goals could be farfetched if reports about the country’s saving culture are anything to go by. Recent data from the Kenya Deposit Insurance Corporation (KDIC) states that about 97% of Kenyan bank account holders have less than KShs 100,000 in their accounts. According to a study by Capital Markets Authority (CMA), Kenya’s Gross Savings Rate has tremendously dropped from 11.7% to 6.2% in the last ten years.
The gross domestic savings from the Treasury ’s latest statistics fell to KShs795.1 billion from KShs 807 billion in 2016, despite the GDP growing by 4.9% to KShs 7.75 trillion. The CMA study which focused on the low uptake of capital markets’ products revealed that a majority of Kenyans had much better saving habits in the 80s and 90s which saw more companies enlisting in the Nairobi Stock Exchange (NSE). Today, however, industry bigwigs like Access Kenya, CMC Holdings, Vipingo, Baumann Limited, Hutchings Biemer and Express Kenya have pulled out of the NSE within the last five years. Indeed, the poor saving culture seems to be affecting the stability of the NSE with 75% capitalization accounted for by just six firms. In an overview of the saving trends across other African nations, the World Bank notes that less flourishing countries have a much better saving culture than Kenya, which is considered East Africa’s economic giant. While Chad was at 21.1%, the Democratic Republic of Congo at 10.2%, and Uganda and Tanzania above 20%.
“The saving rates in Africa are comparatively low at around 17% of the total gross domestic product. Kenya is not an exception. In fact, it actually saves 13-14% of its GDP over the last five years which is less than most of the other African countries with an average saving rate of 26%,” World Bank’s economist Wolfgang Fengler explains.

“These figures speak of a tough economic time for Kenyans,” states Stanbic regional economist Jibran
Qureishi. In 2018, Qureishi told a local newspaper that the high cost of living is the main reason as to why there is a poor saving culture in Kenya. While in developed economies that have a lower cost of living, the poor saving culture is attributed to poor spending habits.

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