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The measure of a robust economy is defined by a growing middle class, the aspirational citizens.

According to the Kenya National Bureau of Statistics (KNBS), a middle-class Kenyan is anyone who spends between Sh23,670 and Sh199,999 a month. All indications are that Kenya’s middle class is made up of big spenders.

One only needs to take a stroll through the malls in Nairobi and major towns to witness the spending habits of this class. They also drive big cars, eat expensive food and still have enough to go on holiday. In addition, their children go to expensive private schools and attend after-school extra-curriculum activities. The question is: Where is the money to fund this social status coming from?

The most recent economic survey by KNBS (2019) states that loans and advances from banking institutions increased by 12 per cent to Sh442.3 billion in 2018 from Sh358.6 billion in 2017.

At the same time, total liabilities by Savings and Credit Cooperatives (Saccos) increased by 11.5 per cent from Sh307.0 billion in 2017 to Sh342.3 billion in 2018. Meanwhile, loans and advances increased by 12 per cent from 320,494 million in 2017 to Sh358.6 billion in 2018. 

Clearly, Kenyans are borrowing as fast as they are saving, indicating that the middle class is borrowing to fund its lifestyle.

Dr Gladys Nyachieo, a sociologist and senior lecturer at Multi-Media University, says that where one lives, where one’s children go to school, and what car one drives determine their status.

“Many Kenyans are living a life they cannot afford, this is why you have children in a school bus at 4am to get to a particular school in the suburbs. There is too much societal pressure to maintain the status quo attached to being middle class, forcing people to trap themselves in a cycle of unending debt, even with a reasonable salary. We end up hustling and struggling harder than those who form the lower classes just to dress, look or own certain things. Credit is supposed to facilitate development, not cripple you,” she says.

Dr Nyachieo adds that although socially, change must occur for people to evolve, today’s society has moved away from the communal space to an individualistic one.

“As we seek a certain lifestyle, we are all in competition with one another and the family unit is crumbling as a result. Corruption will get worse, there will be more cases of crime, stress-related diseases, violence, suicide and increased vices. These are some of the social outcomes of being stuck in the continuing cycle of debt.”

At the beginning of last month, the Organisation for Economic Co-operation and Development (OECD) released a report titled: Under Pressure: The Squeezed Middle Class. It states that in most OECD countries the middle class has shrunk since it has become more difficult for younger generations to make it to the middle class, defined as anyone earning between 75 per cent and 200 per cent of the country’s median national income.


Although Kenya is not part of the OECD concentration, one can argue that we are facing the same predicament. On a global scale, middle incomes are barely higher today than they were 10 years ago, increasing by just 0.3 per cent per year, a third less than the average income of the richest 10 per cent. One of the best routes to get to the middle class, says XN Iraki, an economist, is a good education, justifying the chase for expensive schools or taking a Helb loans for university studies.

“Education is how the sons of the peasants become CEOs. Education should be accessible to all citizens irrespective of their family background. That’s why free primary to high school is important.

But it is not just general education, skill matters. What can you give the market? There is a good economic case to subsidise education. On taking up Helb — it’s an egg and chicken situation. We need to grow the economy to create jobs so that we can pay Helb loans.”

Financial capital is another key indicator of a healthy economy, and the need for credit cannot be diminished.

Addressing the burden of lower disposable incomes, Iraki says; “Unfortunately we learn to spend money before we learn to earn it. We need to reduce the cost of capital. One simple way is to have more banks so that competition reduces the cost of borrowing. The interest rate cap has not worked. As a country, we must learn to save. We need savings to facilitate investment and avoid (impractical) borrowing. That is how China and Korea developed.”

In an ideal scenario, Dr Nyachieo says, a healthy middle-class Kenyan can afford their basic needs, lives within their means and has money left over after all arising monthly expenses for savings. It is from these savings that investments which lead to wealth can be made.

“There is a need to address this unhealthy aspirational culture most of us are stuck in. Self-awareness is the key at the end of the day. There is nothing wrong with being aspirational, but our society needs to move away from glorifying the ‘quick-fix’ route to making it in life. The other day we were talking about the issue of betting. Borrowing is highly addictive, something people don’t realise.”

She concludes, “We need to start teaching these lessons from the base family level. Teach children that what you have is yours, that they need to work for their own. And that it is okay not to have all the shiny things the neighbour has today — they can work towards them slowly. Our education curriculum also needs to be looked at. We are not realistically equipping children for the future. Are they learning the value of financial literacy or community?”