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Why Kenyans still favour investing in saccos, banks
ICEA Lion Asset Management Head of Research Judd Murigi speaks at the Serena Hotel during the presentation of the third quarter 2025 consumer Spending Index and Investor Pulse to outline assessment of global economic and market trends and their impact on the local economy and markets on July 28, 2025.
Familiarity has seen Kenyans continue to favour investing through traditional vehicles such as savings and credit co-operative organisations (saccos) and commercial banks, even as the market evolves to include multiple alternative avenues.
Most people remain in the traditional products despite their desire for higher returns, signaling a high degree of risk averseness and a goal of preserving capital.
These investment vehicles continue to lead the way despite proliferation of new avenues including money market funds, retail friendly government infrastructure bonds and offshore products.
According to a new survey by ICEA Lion Asset Management (Ilam), published on Monday and which was derived from interviews conducted on 1,200 individuals across the country, saccos top the investment vehicle preference at 27 percent.
Interest-earning bank accounts and community groups rank joint second at 21 percent while farming is listed fourth at nine percent.
In contrast, preference for money market funds --a type of collective investment scheme investing in short-term government paper and bank fixed deposits-- was at five percent.
Preference for shares, Treasury bills and bonds was at three and one percent respectively.
Ilam Head of Research Judd Murigi says most Kenyans continue to favour investing in traditional assets on familiarity.
“To put it bluntly, it is the fear of the unknown. When it comes to people’s money, safety is the first thing,” he said.
“It will take a while for people to start trusting these alternative investment products. People will stick to traditional products until the alternatives are very well established.”
The survey’s findings on the reason for choice of investment reveal a balance between a push for high returns and capital preservation.
High returns featured as the top choice for investment at 34 percent, but safety ranked closely in third place at 25 percent.
The findings closely track results from the Central Bank of Kenya (CBK) 2024 FinAccess Survey which revealed a low penetration of securities investments.
The preference for listed stocks and government debt securities stood at 2.1 percent, 0.5 percent for online forex and 0.2 percent each for mutual funds and digital apps.
“This preference indicates that traditional financial instruments remain a core focus for investors. The overall low percentages point to an opportunity to promote alternative investment channels and diversify investor participation in the financial markets,” the CBK survey states.
Some alternative investment classes such as MMFs have, however, gained large prominence in recent years but the number of participants has remained low.
The number of Kenyans in collective investment schemes or unit trusts crossed the two million mark at the end of March 2025, driven largely by increased interest in the pooled investments.
The number of investors in unit trusts at 2,021,084 is however dwarfed by that of sacco and commercial bank deposit accounts.
The low penetration of alternative investment vehicles is also tied to demographics where older Kenyans who comprise the bulk of the investing population are largely risk averse.
“It could also be a function of age. You find that the older segment of the population is more comfortable with traditional products,” said Mr Murigi.
