Kenyan households are increasingly turning to side hustles, cutting non-essential spending and reconsidering new borrowing as slower income growth and mounting financial obligations squeeze their budgets.
A study by credit
bureau TransUnion released on Wednesday says that this highlights the gap between expanding access to financial
services and genuine financial security.
The report shows
that only 30 per cent of Kenyan consumers reported an increase in income in the
three months preceding the second quarter of 2026, down from 42 per cent a year
earlier.
The findings point
to weakening household income momentum, even as consumers remain hopeful about
their financial prospects.
The TransUnion Q2 2026 Consumer Pulse Study found that reduced salaries accounted for 27 per cent of reported income pressures, followed by job losses at 24 per cent and business closures or declining orders at 23 per cent.
Although 78 per cent of respondents expected their income to rise over the next 12 months, optimism had declined by five percentage points year-on-year, with younger consumers particularly exposed to employment and income uncertainty.
The pressure is
already visible in households' ability to meet their financial commitments.
While 61 per cent
of respondents said they could pay their bills and loan instalments, the
proportion was unchanged from a year earlier.
Among Generation Z
consumers, however, 54 per cent said they could not meet all their financial
obligations, a seven-percentage-point increase.
The findings
suggest that while many Kenyans remain connected to formal financial services,
their ability to withstand income disruptions and meet recurring expenses
remains constrained.
According to TransUnion,
for households struggling to balance rent, food, transport, utilities,
education and loan repayments, the problem is increasingly not just access to
money but the reliability of income to sustain everyday expenses.
The strain is
prompting consumers to seek alternative ways to stay afloat.
Half of those unable to pay at least one bill or loan in full planned to make partial payments, while another half intended to take up gig work to supplement their earnings.
The latter proportion rose to 54 per cent among Generation Z and 62 per cent among Generation X.
Another 28 per cent
planned to draw on savings or borrow from friends and relatives, illustrating
how households are combining informal financial support with additional work to
bridge budget shortfalls.
TransUnion Kenya
chief executive Morris Maina said consumers were responding to slower income
growth by diversifying their earnings, prioritising essential spending and
making more deliberate borrowing decisions.
“Many households
are diversifying income streams, prioritising essential spending and making
more deliberate decisions about credit,” he said.
The adjustment is
also evident in spending intentions.
More than half of
respondents, or 53 per cent, planned to reduce discretionary expenditure on
activities such as dining out, travel and entertainment.
Another 48 per cent
intended to postpone major purchases, including appliances and vehicles, while
40 per cent expected to cut retail spending.
At the same time,
41 per cent anticipated increasing expenditure on bills and loan repayments,
suggesting that essential commitments are likely to absorb a greater share of
household budgets and leave less room for consumption.
This caution comes
against a backdrop of persistent concerns about the cost of living and the
affordability of credit.
The latest survey
suggests that households are increasingly balancing immediate needs against the
risk of taking on repayments they may struggle to sustain if their earnings
deteriorate further.
The tension between
access and affordability is particularly significant in Kenya, where digital
finance has expanded rapidly but financial resilience remains limited for many
households.
The 2024 FinAccess
Household Survey, conducted by the Central Bank of Kenya (CBK), the Kenya
National Bureau of Statistics and Financial Sector Deepening Kenya, found that
formal financial access had increased to 84.8 per cent from 83.7 per cent in
2021.
Yet only 18.3 per
cent of Kenyans were classified as financially healthy, while 16.6 per cent of
borrowers had defaulted entirely on their loans, up from 10.7 per cent in 2021.
The contrast
suggests that access to banking, mobile money and digital credit does not
necessarily translate into the capacity to save, absorb emergencies or invest
for the future.
TransUnion's
findings also point to a more cautious approach to borrowing.
Although 73 per
cent of respondents considered access to credit very important,
the proportion intending to apply for new loans or refinance existing
facilities over the next year fell to 57 per cent from 69 per cent.
Personal loans
remained the preferred product, cited by 53 per cent of prospective borrowers.
Interest in mobile
loans rose to 45 per cent, six percentage points higher than a year earlier,
while 27 per cent intended to use buy now, pay later products.
The shift comes as
digital lending expands, with CBK's 2025 Bank Supervision Annual Report showing
that outstanding loans from digital credit providers almost doubled to Sh110.1
billion in December 2025, from Sh55.2 billion a year earlier.
The number of
licensed digital credit providers increased from 85 to 195, while the number of
loans rose 71 per cent to 6.74 million.
Household financial
pressures are compounded by digital fraud, which remains a significant threat
as consumers increasingly rely on electronic payments and online financial
services.
TransUnion found
that 77 per cent of respondents had been targeted by attempted fraud through
emails, online channels, phone calls or text messages during the preceding
three months.
Although the share
reporting that they had fallen victim declined to 9 per cent from 10 per cent a
year earlier, Generation Z remained particularly exposed, with 12 per cent
reporting that they had been defrauded.
Among consumers who
received notifications that their identity details or online accounts had been
compromised, 57 per cent changed the affected account's password, while 54 per
cent updated passwords on other accounts.
Half of respondents also said they had enabled passwordless login or multi-factor authentication.
