A significant number of Kenyan households are resorting to borrowing as a means of survival, driven by ongoing economic pressures that compel families to rely on credit for essential expenses such as food, transportation, rent, and more, according to a new financial survey.
The latest Financial Wellness Monitor Report, published by Old Mutual on March 25, 2026, reveals a concerning shift in borrowing patterns. Families are increasingly using loans not for investment or asset accumulation, but rather for basic consumption, which highlights the growing disparity between household incomes and the escalating cost of living.
The study indicates that daily expenses have emerged as the primary reason for borrowing, emphasizing the financial strain faced by working families across various income brackets. The report states that “74 percent of Kenyan households took loans to cover daily expenses and make ends meet.”
Tight budgets have become commonplace, with many households finding themselves with minimal or no financial reserves after settling monthly bills. Only 31 percent of respondents reported having any money left over after their monthly expenses.
Education costs represent another significant financial burden. The ongoing need to pay school fees and related expenses continues to drive families to borrow, underscoring the challenges they face in ensuring their children’s education amidst decreasing disposable incomes.
Moreover, the findings suggest that numerous households find themselves trapped in a cycle of debt, taking out new loans to pay off existing ones rather than improving their financial situations. The survey notes that “12 percent took loans to repay existing debt.”
In the realm of business, credit serves as a lifeline for small enterprises, with respondents indicating that they borrow to purchase inventory or equipment. While this reflects continued entrepreneurial spirit, it also highlights the limited access to affordable formal financing options.
Beyond basic necessities and business needs, households are increasingly turning to loans for medical expenses, home repairs, and other unavoidable costs, illustrating how deeply embedded borrowing has become in everyday life.
As formal borrowing avenues tighten, many Kenyans are leaning more on informal support systems, such as family networks and community groups. The report reveals that “43 percent borrowed money from friends or family in the past 12 months.”
Savings groups, often referred to as chamas, remain vital sources of financial assistance, particularly for families unable to access traditional banking or mobile credit. The report states that “25 percent borrowed from chamas.”
However, these coping strategies come with diminishing financial resilience, as many households deplete their savings to meet urgent needs. The report notes that “40 percent dipped into savings to cover expenses.”
Housing pressures are intensifying, especially for renters in urban areas, where accommodation costs take up a substantial portion of income. The report highlights that “26 percent fell behind on rent.”
Debt levels continue to be a concern, with many households struggling to manage spending and stabilize their finances. Financial stress is prevalent, impacting overall economic well-being and quality of life, with “43 percent reporting high or overwhelming financial stress.”
In response, households are emphasizing income security by cutting expenses and postponing significant purchases. Many are opting for cheaper goods and services, relocating to more affordable housing, and delaying investments or travel.
Despite these challenges, most Kenyans maintain a forward-looking perspective. Savings goals remain robust, particularly in areas such as education, business development, and home ownership. Optimism persists, with many households anticipating an improvement in their financial circumstances, largely fueled by hopes of increased income or enhanced business conditions.
Overall, the report presents a portrait of a population enduring prolonged economic strain, increasingly reliant on borrowing to meet fundamental needs while striving for long-term financial stability. The findings serve as a cautionary note: without stronger income growth or relief from high living costs, credit will likely remain an essential, albeit potentially precarious, lifeline for millions of Kenyan households.
