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Instilling a savings culture in Kenya

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Instilling a savings culture in Kenya

The responsibility to save responsibly rests not only with those already financially literate, but also with Kenyans themselves.Photo | Shutterstock

In a world where people are often not reminded to save money, it is easy to overlook the value of saving and investing. Why would anyone be convinced to save for an unknown future when there are so many other options for instant gratification?

In fact, saving is a powerful tool for personal and national economic transformation. Especially in a country like ours.

For years, Kenya has suffered from a low savings rate and a high reliance on foreign aid. This has led to significant social and economic challenges.

As observed in various studies, Kenya’s savings rate is well below the African average of 17%. Countries such as Uganda and Tanzania have already exceeded 20%, demonstrating that their savings culture is advanced.

Kenya’s low-saving culture can be argued to be due to several factors, including poverty, inadequate financial education, and a limited range of financial incentives. are becoming difficult to stack.

The current national conversation on saving and investing inspired by President William Ruto’s campaign is welcome. emphasized.

He also looks at pension contributions by Kenyans in regular employment, pointing out that they are insufficient to help older retirees.

Currently, employees contribute a minimum of Sh200 each month to the National Social Security Fund, which is usually matched by an equal contribution from employers, with a maximum annual equivalent of Sh2,400. This is not enough for most people in Kenya who need more to live comfortably after retirement. We only provide services.

Still, all hope is not lost. Kenyans looking to start their savings journey have a range of savings products to choose from, as the government and other sector players combine efforts to promote savings in the country.

Banks and financial institutions such as Sacco have numerous savings products that cater to different savings needs and goals. Savings products on the market have different interest rates, and interest is paid monthly, quarterly, semi-annually, or annually. Some savings accounts allow you to earn interest on deposits of as little as Sh50, but have varying withdrawal limits.

This simply means that Kenya’s portfolio of savings products, both formal and informal, is diversified enough to cater to everyone.

So what needs to be done to encourage people to save more? Governments need to develop broad policies covering other means of saving besides Social Security. The government’s plan to save 1 shilling for every 2 shillings set aside needs to be expanded to cover other savings incentives. This will help improve Kenya’s economic situation. Because more money will be available for investment and more jobs will be created.

Postbank, for example, has worked to provide low-cost savings accounts to the average Kenyan with the aim of promoting financial inclusion in Kenya. We also conduct advanced financial literacy activities for all customer segments with which we work. As the largest and oldest savings bank with a mission to instill a culture of savings, the bank has a diversified personal and group savings product portfolio that offers tax-free interest income. The bank stands ready to support Kenya’s savings transformation journey.

As the country’s top leaders try to change mindsets and instill a culture of saving, the public is becoming more aware and educated about what they need to save, how to save effectively, and the various incentives that come with saving. need to raise.

In an economy that is growing at an unprecedented rate, the responsibility lies not only on those already financially literate, but also on Kenyans themselves to save responsibly so that they can contribute to economic stability.