10%

Living on little

Inside lives shaped by scarcity

By FSD Kenya

December 3^rd, 2015

The kenya financial diaries research project

In 2012 and 2013, a team of researchers visited the same 298 families across five areas of the country every two weeks for more than a year, tracking in fine grained detail how they earned, spent, and managed their money.

Photograph by Abraham Ali. Mombasa, Kenya.

Saving shilling by shilling

This offered us a deep view into how low income people in Kenya manage money, summarized in Shilingi kwa Shilingi. We found that most of our respondents were net savers, and much of that savings was oriented towards investments in the future, not simply for cash flow smoothing.

Photograph by Abraham Ali. Eldoret, Kenya.

Turbulent money

The median household in our study earned income from 10 different sources over the course of the year. Incomes were also very volatile, fluctuating on average 54% up or down from month to month.

Hard choices...

With low, volatile incomes and a large share of expenditures consumed by basic needs, there is not enough money to allocate towards every potentially “good” financial management strategy like diversified savings vehicles, insurance, and business investments. Low income people make tradeoffs.

...with difficult implications for HEALTH...

This had real life consequences. 38% of households delayed or forewent necessary medical care during the course of the project year, usually because they were short of small amounts of money needed to get treatment quickly.

Photograph by Abraham Ali. Nairobi, Kenya.

...AND EDUCATION.

56% of households had a child sent home from school due to late fee payments. Parents were reluctant to pay early, when that money could otherwise be circulating for household and business needs until the school really needed it. Secondary school fees were a major source of financial stress for parents in our study. (See Getting an Education in Rural Kenya)

RELATIONSHIPS AND RISK

Social networks played a very important role boosting household incomes, especially when the family experienced a shock, like a death in the family or hospitalization. Risk sharing was extremely helpful, but not perfect. (See Two Steps Back)

LEVERAGING THE SOCIAL NETWORK

Qualitative work conducted alongside our regular interviews shed light on the ways that women and men leveraged their social networks to cope with risk and take advantage of new opportunities. (See Capacities to Aspire)

MEN, WOMEN & MONEY Priorities

While our male and female respondents often had a shared vision of future success, their priorities often diverged. Our female respondents tended to prioritize housing and education, with men prioritizing land and business investments. Negotiating these differences in money priorities was a major source of strain in many relationships.

NEXT STEPS

FSD Kenya continues to explore these stories through ongoing work. In 2015, the same team of researchers revisited the Financial Diaries households to check in on how their lives are changing.

Photograph by Abraham Ali. Makueni, Kenya.

In early 2016, we will be releasing findings about how respondents’ lives continue to change and the role that a rapidly changing array of financial services is playing in helping them build assets, expand their livelihood activities, and cope with risk. In the meantime, you can find more resources from the study at the FSD Kenya website.

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Footnotes

Photographs by Abraham Ali.

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FootNotes

Photographs by Abraham Ali.

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