Kenyans Are Broke – Less than 1% of Bank Accounts have Over Ksh.1m Deposited Amounts

Kenya is a broke nation, and so are its people; at least that is what Central Bank Governor Patrick Njoroge means when he says that only 0.7 percent of bank accounts in the country have deposited amounts of over 1 million shillings.

If the measurement of wealth was derived from the amount of cash one has in their bank accounts, it wouldn’t take a buffoon to deduce that Kenyans are languishing in extreme poverty.

Whether Governor Njoroge is right or not, the painted picture screams a dire distress call for people to be lifted out of poverty.

If only 0.7 percent have more than 1 million in their accounts, it would mean that a whopping 99.3 percent of bank accounts in the country are yet to hold an amount that surpasses the million-shilling mark.

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In retrospect, the sentiments don’t come as a surprise especially since the rate of unemployment, corruption cases, and other vices are rocking the country. Taxes, unfavorable business policies, and the government’s insatiable appetite for debts are stifling growth efforts.

Then there is the consequence of banking laws. CBK regulation mandates that any transaction of more than a million shillings should be reported. While this is a good move in trying to curb corruption, it also has a negative impact.

The policy only serves to make Kenyans shy away from depositing huge amounts of cash in their bank accounts, even though Mr. Njoroge on February 26 told the Finance Parliamentary Committee that Kenyans willingly report on any transactions as per the regulations.

Clearly, Kenyans are perhaps depositing just enough amounts in their accounts for fear of having to exercise the reporting policy.

Nevertheless, if Kenyans are not broke, the low number of bank accounts as reported by the CBK governor could be as a result of their storing cash in digitized forms as opposed to their bank accounts.

There are loan apps that allow one to save within the platform and Mshwari is a good example. And if that is the case, this could mean that although bank accounts continue to dominate over mobile money accounts, the popularity of the digital form is likely to take over the market.

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The banking industry itself has been marred with its fair share of misfortunes. Several banks have collapsed over the years including Imperial Bank, Dubai Bank, and Chase Bank.

This means that Kenyans are perhaps afraid of storing large amounts of their money in bank accounts. They are no doubt increasingly becoming more cautious about depositing huge sums of money at the bank.

Also, other individuals distribute their money in various bank accounts and other digital platforms for convenience and security.

One, however, can’t help but wonder whether the bank vaults also don’t receive that much cash. Should that be the case, then maybe Governor Njoroge’s firm statement that the reporting is in line with international anti-money laundering regulations is working to a certain extent.

Njoroge said that reporting of such cases is mandatory for the avoidance of crime, particularly terrorism funding, where criminals might transact large sums of money.

In that case, therefore, maybe Kenyans are not that broke as the numbers infer. The reasons as to why many Kenyans have less than 1 million shillings could be as diverse as the bank accounts themselves.

But before dismissing the claims entirely, you should acquaint yourself with the report released by the Kenya Deposit Insurance Corporation (KDIC) in 2015, which said only 96 percent of Kenyans hold deposits that are less than 100,000 in bank accounts.

The report indicated that the small depositors accounting for 96 percent of account holders account for just 20 percent of the entire value of deposits with the remaining 80 percent of the deposits shared by rich individuals and institutions.

If the number of accounts has grown, and if the amounts deposited has been gradually increasing, then the rate at which it grows could still be marginal. So, yeah, perhaps there is a lot of who are broke.

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