MAJORITY of the poor in Kenya are forced to forgo important expenditures such as food, education and medical care due to unstable monthly incomes, a new survey shows.
A Financial Sector Deepening report dubbed Kenya Financial Diaries which focuses on the lives of the poor people in the country; shows that income for this group drops by an average of over 50 per cent month to month despite these households having about 10 revenue sources per home.
The report released yesterday in Nairobi based on a sample of 300 poor households whose financial habits were studied for over a year indicates that 38 per cent of the respondents had foregone medical care at least once while 11 per cent had done so more than three times.
A quarter of the households studied had to forgo food at least once while nine per cent had to do without food more than three times.
In terms of education, 57 per cent said their children had been sent away from school for lack of fees at least once while 27 per cent said it had happened more than three times.
To meet their household expenses and basic needs; poor people, the survey showed, mainly borrowed money from friends and relatives, took credit at the shop, deferred payment of rent or fees, borrow from chama, and use of airtime credit like Safaricom's Okoa Jahazi facility.
Bankable Frontier Associates, which also helped conduct the FSD report on the poor, said this group comprises of people who constantly save because they prefer savings to credit.
"There is a bigger preference for savings than credit," said BFA's senior associate Julie Zollman during the handover of the report.
Digital Divide Data MD Amolo Ng'weno added: People believe money is supposed to work for them. When they deposit that money they see no interest and perceive as if it is idle. But in a chama group they someone else even if not yourself will invest that money and they prefer it."
Central Bank Governor Njuguna Ndung'u said banks have left a huge portion of the population out because these people do not understand how they work.
"When the poor have secure savings, it reduces their vulnerability to periodic economic and social shocks," he said.
Ninety per cent of the poor, the report said, prefer to save via mobile phone money channels, 78 per cent in a rotating savings and credit association, 77 per cent in the house while 52 per cent also saved via friends and family through lending them.