While the majority of Kenyans are still considered financially illiterate, a survey has shown that many still rely on their knowledge when making financial choices and decisions.
According to the 2024 FinAccess Household Survey, self-reliance emerged as the primary source of financial advice, with 37.3 % of respondents relying on themselves. Friends and family remained a significant source of financial advice in 2024.
Financial literacy encompasses the awareness, knowledge, skills, and attitudes needed to make informed and effective financial decisions.
A critical aspect of this literacy is the source of financial advice individuals rely on, which reflects their trust in specific institutions or individuals.
Trustworthy and accessible financial advice can guide sound decision-making, reinforcing consumer confidence in the financial ecosystem.
Additionally, there has been a notable increase in the use of formal financial institutions for advice, registering 5.0 % in 2024 compared to 2.9 % in 2021.
The survey also indicates that more males relied on themselves for financial advice compared to females. In addition, the gender gap narrowed slightly to 6.7 %age points in 2024 from 8.7% age points in 2021, reflecting increased autonomy among females in financial decision-making.
However, reliance on personal networks (friends and family) for financial advice significantly increased among females and males to 51.3 % and 42.4 %, respectively, in 2024, from 3.0 % and 4.3 %, respectively, in 2021.
Subsequently, notable growth was observed in males’ and females’ seeking advice from formal financial institutions, with males seeking advice increasing to 5.7 % in 2024 from 3.6 % in 2021 compared to females seeking advice, which rose to 4.3% in 2024 from 2.1 % in 2021.
The influence of media and advertisements as a source of financial advice has diminished among males, with a significant decrease from 4.3 % in 2021 to 3.7 % in 2024, while on the other hand, females recorded an increase from 3 % in 2021 to 3.3 % in 2024.
Group/Chama usage has almost disappeared in 2024, reflecting a significant shift away from informal, community-based sources of financial advice.
A large portion of respondents across all education levels rely on themselves for financial advice. This is most common among those with no formal education (47.3 %) and those with secondary education (32.8 %).
Friends and family are also a major source of advice for many people, especially those with no formal education (44.0 %) and primary education (45.3 %), showing the importance of informal support networks.
Urban residents took the lead in seeking financial advice from friends and family, recording 48.5 % against those in the rural areas, standing at 45.9 %.
On the other hand, rural residents took the lead in self-reliance on financial advice, recording 39.3 %, compared to those in urban areas, who recorded 34.4 %.
Respondents were shown a typical SMS message displaying transaction values and related costs, similar to those used by financial service providers. Results showed that 72.7 % of respondents could accurately read and interpret a message indicating transaction costs on a mobile phone, with 76.3 % of males and 69.1 % of females interpreting the information correctly.
The survey results indicated that 81.0 % of the respondents who did not attend school could not read the SMS.
Respondents with a Tertiary level of education were able to read and interpret the SMS recording at 97.1 %, followed by secondary and primary at 90.2 % and 59.0 %, respectively.
The survey result indicated that most respondents could correctly answer the questions on the interest rate and inflation rates, recording 80.0 % and 86.8 %, respectively, compared to the risk diversification questions, which only 54.9 % of respondents answered correctly.
The survey assessed respondents’ ability to calculate 10.0 % interest on a Ksh 1,000 loan accurately. Approximately 80.1 % of respondents provided the correct interest cost, 16.2 % gave incorrect answers while 3.5 % did not know. Among respondents, 82.8 % of males correctly calculated the interest, compared to 77.5 % of females.
