Stima Sacco stand at KICC during the 2022 Ushirika Day celebrations.

     Kenya joined other countries to celebrate the World Savings Day on October 30th. It was established in 1924 during the first International bank savings day in Italy. This day promotes savings as a key driver of economic growth and development. It encourages people to embrace the culture of savings, especially through financial institutions like commercial banks, saccos and microfinance banks.  This year, the day’s theme was: ‘Savings prepare you for a better future.’

      It is easy to overlook the value of savings and investments. With so many other instant gratification financial options like unsecured mobile loans, why would anyone be convinced to save for an unknown future? The truth is that savings is a powerful tool for an individual’s and a country’s economic -transformation especially in countries like Kenya   where the savings culture is not properly inculcated.


     Through savings, we are able to respond and deal with unexpected costs and emergencies that come along in the day to day life. Reaching our short, medium and long term financial goals also is a product of having a good savings programme and discipline.  When one thinks of investments like house, car and land which require huge funds to acquire prior savings can be of good help.

    For years, Kenyans have struggled with poor savings habits. Most of them haven’t learnt the financial discipline that is required in saving their hard earned income. Arguably, this can be attributed to low incomes which by and large contribute to a life of hand to mouth.  Consequently, many households don’t have enough money to meet their basic needs and to save for a rainy day.

    The government emphasizes on the need for Kenyans to embrace a culture of saving as part of efforts to improve the country’s economic situation. As observed from various studies, the country’s savings rate is way below Africa’s average of 17 per cent. The likes of Uganda and Tanzania have already crossed the 20 per cent mark, signifying a more advanced savings culture. It can be argued that Kenya’s  poor  savings culture stems from several factors including: poverty, inadequate financial education towards saving and a limited range of available financial incentives.

    Currently, employees contribute a minimum of Kshs.200 monthly to the National Social Security Fund (NSSF).  This is usually matched by an equal contribution from their employers, translating to a maximum of Kshs. 2,400 annually. This is far from enough for most people in Kenya who need more to live comfortably during retirement. In addition, the pension scheme only serves people in formal employment leaving out a vast majority of Kenyans who work in the informal sector.

    Nonetheless, all hope is not lost. As the government and relevant sector players combine efforts to enhance and boost national savings, Kenyans looking forward to starting   their savings journey have a variety of products to choose from. Financial institutions such as commercial banks and saccos have numerous savings products that cater to different saving needs and goals. Saving products across the market have different interest rates  that  are payable either monthly, quarterly, twice a year or once a year. Some savings accounts require as little as Kshs. 50 deposits to start earning interest with varying withdrawal limits.


    This simply means that the savings products portfolio in Kenya is diversified enough to cater for needs of many people, both in the formal and informal sectors. So what needs to be done to encourage people to save more? The government needs to develop broad policies that covering other savings instruments (besides social security) that will provide financial security and promote savings in the long run. The government’s plan to match pension savings by a shilling for every two shillings set aside should be broadened to also cover other savings incentives. This will help improve Kenya’s economic status because it would mean more money will be available for investment, which would lead to more jobs being created.

    The Kenyan financial sector has inevitably found itself unable to resist technological indulgence.  The wave of offering customers alternative channels has been largely driven by M-Pesa penetration across the country. Despite its promises, digital banking in Kenya has faced many threats.  Cyber criminals have been targeting mobile banking platforms to defraud financial institutions.   These institutions   have been hit hard with losses amounting to approximately to Kshs.106 million in 2021. The cyber criminals are targeting the mobile platform due to the ease of accessing their loot after compromising the financial institution. According to Yelbridges forensic research indicates that the platforms have a higher risks compared to other channels that offer the same services in these institutions. It is advisable for one to carry out due diligence on the financial institution   he or she  intend to save in and confirm that data protection for customers ‘  accounts is sound , while  the online platforms are reliable and efficient. This will  prevent  you  from losing your hard earned money  to  fraudsters.



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