Kenya’s economic outlook in 2024 presents a complex scenario. On the surface, there is cause for optimism—inflation is at a historic low of 2.7 per cent, the lowest in 12 years, and interest rates have dropped to their lowest levels since 2020.
Yet for many Kenyans, this macroeconomic data fails to reflect the daily challenges they face. Limited access to credit, the widening gap between stagnant wages and the soaring cost of living paint a more sobering picture.
For many households, this means grappling with tough choices: prioritising immediate needs over savings, scaling back on non-essentials, and finding creative ways to make ends meet.
For businesses, the challenges are equally daunting, with constrained liquidity and shifting consumer behaviour creating a more competitive and volatile landscape.
For both individuals and businesses, survival in these conditions requires more than mere resilience; it demands strategic financial management, innovative approaches to growth, and a readiness to seize opportunities even in adversity.
One promising avenue for retail investors is the growing popularity of collective investment schemes (CIS), particularly Money Market Funds) MMFs). These schemes offer a practical entry point for individuals with limited disposable income, allowing them to invest as little as Sh500 in professionally managed portfolios.
CIS provide diversification and a buffer against market volatility, making them an attractive option during uncertain times because of their flexibility of accessing funds during difficult times and a good means of achieving a financial goal through regular savings.
As of September 2023, the Capital Markets Authority reported that assets under management by these schemes had crossed over the Sh300 billion mark.
This growth underscores their potential to democratise investment opportunities, giving Kenyans a chance to grow their wealth despite economic challenges. Moreover, the accessibility of these schemes provides a unique opportunity for low-income earners to develop a habit of saving and investing, fostering financial literacy and long-term security.
For businesses, the path to survival and growth in this economic climate begins with a deep understanding of their core operations and priorities. A diagnostic approach that evaluates key areas like customer retention, competitive advantage, and resource allocation is essential.
Agile businesses that can streamline operations, pivot when necessary, and focus on their strengths are better equipped to withstand economic pressures.
Innovation is also critical; companies that explore creative solutions, such as leveraging technology to reduce costs or entering new markets, stand a greater chance of thriving. In particular, digital transformation can be a game-changer for small and medium enterprises, enabling them to access broader markets and improve operational efficiency at relatively low costs.
Long-term financial planning remains a cornerstone of financial resilience. In uncertain times, structured savings and retirement plans provide not only a safety net but also a disciplined approach to financial independence. Such long-term strategies are vital for mitigating the impact of economic turbulence and ensuring stability in the years ahead.
Access to credit is another critical factor for business growth during challenging times. However, as financial institutions tighten their lending criteria, businesses must work harder to build trust and credibility with lenders.
Maintaining transparent financial records, developing a clear borrowing strategy, and demonstrating prudent financial management are essential steps. By fostering strong relationships with financial institutions and aligning borrowing with sustainable growth plans, businesses can secure the funding they need to innovate and expand, even in a constrained economic environment.
Ultimately, the key to thriving in a dejected economy lies in proactive financial management and a forward-looking mindset. Individuals and businesses alike must adopt disciplined spending habits, continuously assess their financial positions, and remain alert to emerging opportunities.
While the current challenges may feel overwhelming, they also offer a chance to build resilience, innovate, and create a foundation for future success.
Crucially, this period calls for collaboration across sectors. Public-private partnerships, knowledge sharing, and community-based initiatives can amplify the impact of individual efforts, ensuring that growth is not only achievable but sustainable.
By embracing change, taking calculated risks, and focusing on long-term goals, Kenyans can turn today’s hardships into tomorrow’s opportunities. In every crisis lies the potential for growth—if only we are prepared to act strategically.
Joyce Gitau Kiragu is the CEO of Orient Asset Managers