How poor Kenyans survive hard times

Low income earners in Kenya have an average of 10 different sources of livelihood to increase their survival rates, a new report says.

It also noted that assistance received from other family members or friends also accounts for an important means of living to see the next day.

Senior associate at Bankable Frontier Associates (BFA) Julie Zollmann said the needy switch between the different sources to make ends meet.

“We found out that typical families are piecing together incomes from different sources to try and construct a bigger whole. In some cases, it reflects frequent shifts in income earning strategies moving between for example, running businesses to picking up casual work,” she said while presenting the findings on Tuesday.

The report, dubbed Kenya Financial Diaries, comes after a three-year study commissioned by Financial Sector Deepening and carried out by BFA and Digital Divide Data Kenya.

“These contributions help cover basic needs and also enable families to stretch and cover unexpected expenses. As a result, they have a smoothening effect in rural areas, helping to reduce some of the volatility in income that these households otherwise experience,” Ms Zollmann said.

The poor have kept some liquid assets and their credit lines open to make it easy to access short term funds whenever the need arises. The study revealed that rural people rely much more heavily on agriculture and resources received, while those in urban areas turn to self-employment, regular work and casual labour.

COPING MECHANISM

While noting the dynamic and complex nature of the financial lives of the poor, Central Bank of Kenya (CBK) governor Njuguna Ndung’u said poor peoples’ practice of switching between different income sources was a coping mechanism especially in the face of an unpredictable future.

The study underpins the need for more diverse financial service options to enable people, especially poor households, to manage their short term cash flow requirements and long term investments to provide a predictable income source.