Most Kenyans are living from paycheque to paycheque, barely able to save as little as Sh100 from their monthly earnings.
Finance Cabinet Secretary Henry Rotich in a past interview has expressed his apprehension about the lack of saving culture among Kenyans, which he argues, was affecting the country’s overall Gross Domestic Product (GDP).
He said Kenyans are saving only an average of 12 per cent of their earnings, which is too little to support any meaningful investment in any sector of the economy. “The savings rate in Asian economic giants such as Singapore and Malaysia is as high as 40 per cent of individual incomes. If our GDP is to grow in double digit rate, people have to save more,” explained Rotich.
Pension fund managers have also raised a red flag, saying that most Kenyans are not saving for their retirement, and are bound to live in extreme poverty in their old age. Pension consultancy firm CPF Financial Services, formerly Laptrust, said low savings will see more Kenyans ‘retire into poverty’. CPF Chief Executive Officer Hosea Kili noted that Kenya has an estimated population of 47 million people, majority of whom don’t save. In addition, more than 85 per cent of those working in the informal sector are not covered by any pension fund.
Most Kenyans say they do not save much, especially in pension schemes because they earn little and barely have enough for their daily needs, let alone pension savings. This is backed by data from the Kenya National Bureau of Statistics, which shows only 68,676, or 2.89 per cent, of formal sector employees in Kenya earn more than Sh100,000 a month.
More than half of formal sector workers (64.5 per cent) live on wages ranging from Sh20,000 and Sh49,000.
It is good that the finance cabinet secretary has seen it but in this article i fail to see where the ministry gives a way forward to see that Kenyans and Kenya as a whole change this trend inorder to foster development and not retire in poverty.