One of the pitfalls of trying to mingle with the Joneses is that one ends up living above their means in the process of trying to fit in. And for millions of Kenyans, trying to keep up appearances under false pretences is translating to millions in unpayable debt.
According to a new survey conducted by research and consulting firm, Infotrak, it has been found that 70 percent of banked Kenyans are living beyond their means and are in over their head in debt that may never be fully repaid during a lifetime.
In other words, seven out of every ten Kenyans who have access to formal banking services spend more than they earn each month, thus burying themselves in a state of permanent indebtedness. And oddly, it is the pressure of “living the good life” that is leading to these poor financial choices that are entrapping a good number of Kenyans in debt.
The study also found that a great number of families in Kenya are at risk of plunging into full-blown poverty in the event of sudden economic destabilisation from, say, the loss of a job or a bout of some debilitating infirmity.
“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.
Infotrak’s survey uncovered that many Kenyans are tempted by the allure of the good life and a lot of them take easy loans to fund such lifestyles. It found that “peer pressure” may be causing young Kenyans to cave in and borrow sizeable sums from local banks to finance lifestyles they cannot afford, leaving them in crunching debt.
The research was conducted through face-to-face computer-assisted personal interviews within the banking halls of sixteen unnamed commercial banks in Nairobi.
Some of the findings of the research suggested that many Kenyan families are financially vulnerable. It found that such families were barely hanging on precariously as they are just one job loss or one ailment away from poverty.
The research also looked into seven microfinance banks where it found that though Kenya has seen its economy grow at an average of 5 percent per annum in the last four years, a steady fall in corporate profits, a stagnation in workers’ incomes and a series of employee layoffs that have slowed down the growth of small businesses, have put a dark cloud over the numbers that says the country’s economy is not exactly badly off.
Featured Image Courtesy: bbc.com