According to a new survey, 70% of banked Kenyans are neck deep in debt and living beyond their means.
Research and consulting firm Infotrak found out that seven in every ten Kenyans who have access to formal banking services spend more money than they make each month, putting them in a state of permanent indebtedness.
“Most middle-income households are currently living beyond their means, spending more than they earn as the cost of living and expenses grow at a faster pace than their incomes do," says the study.
Tempted by easy loans, hundreds of Kenyans have ‘gave in’ to peer pressure to live the good life and have borrowed enormous sums from local banks to finance lifestyles they cannot afford.
The research, which was conducted through face-to-face computer assisted personal interviews within the banking halls of sixteen un-named commercial banks in Nairobi, found out that many families are on the verge of plunging into poverty in case of sudden economic shocks such as loss of job or sickness.
"Simply put, many Kenyans are financially vulnerable and two or three pay days away from pecuniary disaster."
Seven microfinance banks also participated in the survey. Kenya’s economy has grown at an average of 5% per annum in the past four years, but the growth has been overshadowed by a steady fall in corporate profits, a stagnation in workers’ incomes and a series of employee retrenchments that have slowed down small businesses.
