Financial saving tools in Kenya
In Kenya’s dynamic economy, saving money is more essential than ever. With the cost of living on the rise, and financial goals such as home ownership, education, and retirement growing in importance, financial saving tools have become invaluable. These tools provide various ways to save, grow, and secure funds, catering to Kenyans across all income levels.
Savings Accounts
One of the most accessible saving tools in Kenya is the traditional savings account, offered by virtually all commercial banks. Savings accounts are ideal for individuals who want a safe place to store their funds with minimal risk. Banks like Equity Bank, KCB, Co-operative Bank, and others provide various types of savings accounts, often with unique features tailored to specific needs. For example:
- Youth Savings Accounts: Accounts for young Kenyans that come with low fees and attractive interest rates.
- Women’s Savings Accounts: Specialized accounts targeting women, with benefits such as flexible savings plans and minimal opening requirements.
- Student and Children’s Savings Accounts: Designed to encourage young people to develop savings habits, often with low minimum balances and parental controls.
Interest rates for savings accounts in Kenya can vary but typically range from 2% to 4%. While this may seem modest, savings accounts remain a secure way to safeguard money for short-term goals or emergencies.
Fixed Deposit Accounts
For those looking to earn higher returns on their savings without engaging in high-risk investments, fixed deposit accounts are an excellent choice. With a fixed deposit, you commit a sum of money for a specified period, usually ranging from three months to a year or more. In return, the bank offers a fixed interest rate, which is generally higher than that of regular savings accounts.
In Kenya, banks such as NCBA and Standard Chartered Bank offer competitive rates on fixed deposits, sometimes reaching as high as 10% annually, depending on the amount and duration. Fixed deposit accounts are ideal for Kenyans looking to preserve their funds and achieve steady growth with minimal risk.
SACCOs (Savings and Credit Co-Operatives)
SACCOs have long been a popular saving tool in Kenya, especially among working-class individuals and small business owners. SACCOs are community-based savings and lending organizations where members pool their funds and can access credit at favorable rates. Many Kenyans prefer SACCOs because they offer attractive interest rates on savings and provide members with affordable loans against their savings.
Some notable SACCOs in Kenya include Stima SACCO, Mhasibu SACCO, and Kenya Police SACCO. SACCO dividends typically range between 8% and 12%, making them a compelling saving and investment option. Additionally, SACCOs are especially beneficial for long-term savings goals such as buying land, paying school fees, or starting a business.
Money Market Funds (MMFs)
Money market funds (MMFs) are a type of mutual fund that invests in short-term, low-risk financial assets such as government securities, treasury bills, and corporate bonds. In Kenya, MMFs have become increasingly popular because they offer higher returns than traditional savings accounts and allow individuals to withdraw funds with minimal notice.
Leading providers of MMFs in Kenya include CIC Money Market Fund, Britam Money Market Fund, and NCBA Money Market Fund. MMF returns vary depending on market performance but generally range between 8% and 11% annually. MMFs are an ideal tool for Kenyans looking to grow their savings while keeping their money accessible for emergencies or unexpected expenses.
Mobile Saving Platforms
Kenya has earned international recognition for its mobile money revolution, and saving has become more accessible than ever through platforms like M-Pesa and Airtel Money. These mobile wallets offer convenient saving tools for individuals across all income levels.
- M-Shwari: Launched by Safaricom and NCBA, M-Shwari allows users to save and borrow through their M-Pesa accounts. The M-Shwari savings account offers a 6.65% annual interest rate, which is competitive for a mobile-based service. M-Shwari also provides short-term loans, making it ideal for those who need access to quick credit while building a habit of saving.
- KCB M-Pesa: Another product within the M-Pesa ecosystem, KCB M-Pesa is a collaboration between KCB Bank and Safaricom. It allows users to save and access loans through their mobile phones. The savings account offers competitive interest rates, with the convenience of mobile banking.
- Equity Eazzy Save: Equity Bank’s Eazzy Save account enables users to save through the Eazzy Banking app, offering flexibility, attractive rates, and ease of access.
Government Securities
For Kenyans seeking secure, high-yield saving options, government securities such as Treasury Bills (T-Bills) and Treasury Bonds are worth exploring. Treasury bills are short-term investments with durations of 91, 182, or 364 days, while Treasury bonds are long-term investments ranging from 2 to 30 years.
Treasury bonds and bills are relatively low-risk because the Kenyan government backs them, and they offer competitive interest rates. The minimum investment in Treasury bills is usually KSh 100,000, making them suitable for those with a bit more capital to invest. Treasury securities are particularly attractive to those saving for long-term goals like retirement or major life purchases, as they offer stability and relatively high returns.
Insurance-Based Saving Products
Insurance companies in Kenya offer products that blend insurance and savings, providing a dual benefit of protection and wealth accumulation. Endowment policies, for example, allow individuals to save a certain amount over a specified period while ensuring life coverage. These policies pay a lump sum at the end of the policy term, making them suitable for long-term savings goals such as education or retirement.
Providers like Jubilee Insurance, Britam, and CIC Insurance offer products tailored to specific savings goals. These products are particularly beneficial for those seeking financial security alongside growth, as they ensure the policyholder’s dependents are protected in case of unforeseen events.
Digital Saving and Investment Apps
The digital landscape in Kenya has expanded, and now, various apps offer saving and investment opportunities tailored for tech-savvy individuals. Apps like Bamboo, Hisa, and Abacus allow Kenyans to save and invest in local and global stocks, providing an opportunity to diversify their savings portfolios. These apps often come with low entry fees, allowing users to save and invest small amounts over time.
Digital apps also provide features such as automated transfers, goal-setting tools, and real-time tracking, making saving a convenient, interactive, and rewarding experience.
Choosing the Right Saving Tool for Your Goals
With a wide variety of financial saving tools available in Kenya, choosing the best option depends on individual goals, risk tolerance, and time horizon. Here are some tips to help with the decision-making process:
- For Short-Term Goals: If you’re saving for a short-term goal such as a holiday or emergency fund, consider a savings account, mobile saving platforms like M-Shwari, or money market funds.
- For Long-Term Goals: If your goal is to build wealth over the long term, tools like SACCOs, government securities, or fixed deposit accounts can be more effective due to their higher interest rates.
- For Flexibility and Accessibility: Digital saving apps and mobile platforms offer unparalleled convenience, making them ideal for individuals who prefer on-the-go saving.
- For Risk-averse Savers: Traditional savings accounts, government securities, and insurance-based products are excellent options for those who prefer safety over high returns.
Author: Andrew Walyaula
Andrew Walyaula is a seasoned multimedia journalist. waliaulaandrew0@gmail.com
