Majority of employed Kenyans have been forced to reduce investments in alternative sources of income due to financial constraints triggered by heightened cost of living.
The MoneyMarch 2025 report by digital credit provider Tala Kenya shows that the number of of Kenyans on full time employment with no side hustles increased from 20pc to 30pc within the last six months.
Additionally, the report shows that the percentage of salaried Kenyans with a side business shrunk to 20pc compared to 35pc last year, a factor which is blamed on financial constraints which hinders them in diversifying their income streams.
“What a lot of salaried individuals actually want is speak into the future. They are thinking about when I do not have my job anymore, how will I feed my family tomorrow, how will I pay my rent,” said Annstella Mumbi, Tala Kenya General Manger.
The cutback in investment among salaried Kenyan could be attributed to the increased statutory deductions such as Social Health Insurance Fund (SHIF) which became effective October 1, 2024 and the National Social Security Fund (NSSF) which became effective February 1, 2025.
Under the new NSSF rates, employees and employers are required to remit 6pc of employees salary to the savings fund with the maximum contribution among high-income earners rising to Ksh 4320 from the previous Ksh 2,160.
The report shows that 9 out of 10 Kenyans surveyed have been experiencing financial challenges over the past six months with 32pc feeling stressed about their financial situations.
According to the survey, 92pc of respondents said rising costs have affect their household budgets forcing them to cut back on non-essentials and struggling to meet financial goals.
59pc of respondents said they have cut back on their expenses due to the rising cost of living, 51pc started a business, 46pc took a loan while 14pc opted to take a second job.
“People who are borrowing for consumption purposes are people who are salaried. They want to repay monthly. On average they are borrowing between 3-4 times a year and they are borrowing for school fees and health emergencies,” added Mumbi.
Business expenses, education, and day-to-day living needs are the top three reasons for borrowing, with about 80pc of borrowers confident in their ability to repay their loans.
