Kenyans cut Sh53 billion from their savings in September in a month saw workers dig deeper into their pockets to finance back to school and other household expenditures.
The latest monetary statistics released by the Central Bank of Kenya (CBK) show that in September 2021, demand deposits — money saved in bank accounts but are available for withdrawal on short notice — fell Sh47 billion from Sh1.47 trillion in August to Sh1.42 trillion in September.
The data published by the CBK also show long term savings fell by Sh4 billion to Sh1.63 trillion over the reference period.
The fall is the biggest on a month-to-month basis since November last year when the country was experiencing the third wave of the Covid-19 pandemic.
“Jobs have not recovered to pre-pandemic levels, and with the packed education calendar parents have been hit hard by school requirements such as school fees and other finances needed in school within a short time this has led to massive dissavings,” said Ken Gichinga, chief economist at Mentoria Economics.
“With the phased reopening of the economy, investment opportunities have started opening up, as result Kenyans are going into their savings to invest in areas that promise better returns.”
Schools reopened for the second term in early October after a one-week break as the Education ministry aims to recover time lost at the height of the pandemic.
The disruption has in turn has exerted pressure on parents as some have even resorted to borrowing or selling property to finance education for their children.
Cash in circulating outside the banking system fell for the second consecutive month to Sh234.4 billion from Sh236.3 billion in August. Cash outside banks acts as a broad indicator of the general economic health of a country at a given time had hit an all-time of Sh242 billion in July.
Removal of the night curfew in October, the economy is expected to recover at a faster pace as a result experts expect more wealthy Kenyans storing cash in savings accounts to invest in other areas such as the stock market.
The return rate on long-term savings averaged 6.3 percent in September and has been unchanged since April, the rate was slightly lower than the inflation rate, which hit a record high of 6.9 percent in the same month.The Treasury expects the economy to rebound this year with a growth of 6.1 percent aided by increased public and private investment and spending.A report released by real […]