Nairobi, Kenya,

Kenya’s Consumers Stay Resilient in Face of Economic Headwinds

Quarterly TransUnion Consumer Pulse study finds household incomes up, but discretionary spending under pressure

Kenyan consumers shrugged off macroeconomic headwinds to remain optimistic about their financial prospects in the third quarter of 2022. According to TransUnion’s Q3 Consumer Pulse Study1, eight in 10 (81%) Kenyans expect their household incomes to increase in the coming year, while nearly two in three (64%) say they can pay their current bills and loans in full.

In all, 41% of respondents to TransUnion’s quarterly Consumer Pulse study1 said their incomes had increased in the previous three months. Nearly two in three (31%) said their incomes had remained unchanged, while 28% reported decreased household incomes. Salary reduction was the top reason (29%) consumers said their household income had changed in the month preceding the survey, followed by starting a new business (26%).

These positive signs came despite Kenya’s annual inflation rate increasing to 8.3% in July 2022, according to the Kenya National Bureau of Statistics – the highest since June 2017. The main drivers of inflationary pressure were increases in the prices of food and non-alcoholic beverages (up 15.3% year-over-year), transportation (up 7%), and housing and utilities (up 5.6%). The increased costs of necessities are likely to have an impact on consumer spend in the coming months, according to Weihan Sun, Director of Research and Consulting at TransUnion Africa.

“It’s likely that inflationary pressure was curbing discretionary spending among Kenya’s households in the three months leading up to this survey, and we expect that this trend will continue. However, the fact that the majority of households are still able to service their bills and loan obligations is a sign of resilience, especially during uncertain macroeconomic conditions at a global level,” said Sun.

Of all respondents, 48% said they would make further cuts to their discretionary spending in the three months following the survey.

Regarding bills and debt management, 46% of all survey respondents who said they won’t be able to pay a current bill or loan in full intend to pay a partial amount that’s affordable to them, but not the entire outstanding balance. Another 41% of those unable to pay indicated they’ll use their savings to do so, while 40% are likely to borrow money from a friend or family member to service their current bills and debt obligations.

Only 35% of Baby Boomers expected to be able to pay their current bills and loans in full. As older consumers begin to enter retirement, this challenge is likely to become more ubiquitous due to the limited sources of disposable income available to service debt obligations among this age group of Kenyans, said Sun.

Nearly all consumers surveyed (98%) considered access to credit and lending products important to achieve their financial goals. Most consumers (60%) surveyed plan to apply for new credit or refinance existing credit in the next year, led by Baby Boomers, where two-thirds (68%) intend to do so within the next year, followed by Gen X at 63%, Millennials at 60% and Gen Z at 56%. The top three credit products among consumers who said they’ll apply for new loans or to refinance existing credit in the next year are a personal loan (48%), credit card (33%), or new mortgage, home loan or bond payment (28%).

Managing financial choices

Two-thirds (65%) of consumers said they conduct up to half of all transactions (finances, retail and business transactions) online, while 35% of Millennials and Gen X consumers claimed that they conduct most of their transactions online.  

Most consumers (78%) believe monitoring their credit is very or extremely important, and 77% said they monitor their credit at least once a month. Younger consumers were more active in monitoring their credit, with 23% of Gen Z consumers and 22% of Millennials monitoring their credit daily, compared to 9% of Gen Xers and 5% of Baby Boomers. Two-thirds (65%) believe their credit scores would increase if businesses leverage alternative data sets not included on a standard credit report, like rental payments, gym membership payments, and buy now, pay later (BNPL) products, among others.

Identity risks and usage

Nearly four in 10 (37%) consumers surveyed said they were unaware of any digital fraud schemes targeting them in the three months prior to the survey. A lack of awareness of digital fraud schemes was greatest among older consumers: 58% of Baby Boomers were unaware of any fraud schemes targeting them. This is concerning because many could have been targeted but still be unaware that they had become victims of fraud without realizing it due to this lack of awareness, said Sun.

Consumers who said they were targeted with digital fraud in the last three months noted the most common scams as money/gift card scams (50%), third-party seller scams on legitimate online retail websites (39%), and fundraising scams (28%). “Consumers and businesses need to stay vigilant to fraud attempts. In an increasingly digital world simple steps can make a big difference – something as simple as registering to receive SMS alerts when there is activity on their credit profile can make a big difference – empowering consumers with the knowledge to take action if it was someone else applying for credit in their name,” said Sun.

Consumers can get their free annual credit report from TransUnion here. 

  1TransUnion’s Consumer Pulse survey of 500 adults was conducted between 11–22 August 2022 by TransUnion, in partnership with third-party research provider, Dynata. Adults 18 years of age and older residing in Kenya were surveyed using an online research panel method across a combination of desktop, mobile and tablet devices. Survey questions were administered in English. To increase representativeness across resident demographics, the survey included quotas to balance responses to the census statistics dimensions of age, gender, household income and region. Generations are defined as follows: Gen Z, born 1995–2004; Millennials, born 1980–1994; Gen X, born 1965–1979; and Baby Boomers, born 1944–1964.These research results are unweighted and statistically significant at a 95% confidence level within ±4.4 percentage points based on a calculated error margin.