Kenyan households are increasingly turning to side hustles, cutting non-essential spending and reconsidering new borrowing as slower income growth and mounting financial obligations squeeze their budgets.
A study by credit bureau TransUnion released on Wednesday says that this highlights the gap between expanding access to financial services and genuine financial security.
The report shows that only 30 per cent of Kenyan consumers reported an increase in income in the three months preceding the second quarter of 2026, down from 42 per cent a year earlier.
The findings point to weakening household income momentum, even as consumers remain hopeful about their financial prospects.
The TransUnion Q2 2026 Consumer Pulse Study found that reduced salaries accounted for 27 per cent of reported income pressures, followed by job losses at 24 per cent and business closures or declining orders at 23 per cent.
Although 78 per cent of respondents expected their income to rise over the next 12 months, optimism had declined by five percentage points year-on-year, with younger consumers particularly exposed to employment and income uncertainty.
The pressure is already visible in households’ ability to meet their financial commitments.
While 61 per cent of respondents said they could pay their bills and loan instalments, the proportion was unchanged from a year earlier.
Among Generation Z consumers, however, 54 per cent said they could not meet all their financial obligations, a seven-percentage-point increase.
The findings suggest that while many Kenyans remain connected to formal financial services, their ability to withstand income disruptions and meet recurring expenses remains constrained.
According to TransUnion, for households struggling to balance rent, food, transport, utilities, education and loan repayments, the problem is increasingly not just access to money but the reliability of income to sustain everyday expenses.
The strain is prompting consumers to seek alternative ways to stay afloat.
Half of those unable to pay at least one bill or loan in full planned to make partial payments, while another half intended to take up gig work to supplement their earnings.
The latter proportion rose to 54 per cent among Generation Z and 62 per cent among Generation X.
Another 28 per cent planned to draw on savings or borrow from friends and relatives, illustrating how households are combining informal financial support with additional work to bridge budget shortfalls.
TransUnion Kenya chief executive Morris Maina said consumers were responding to slower income growth by diversifying their earnings, prioritising essential spending and making more deliberate borrowing decisions.
“Many households are diversifying income streams, prioritising essential spending and making more deliberate decisions about credit,” he said.
The adjustment is also evident in spending intentions.
More than half of respondents, or 53 per cent, planned to reduce discretionary expenditure on activities such as dining out, travel and entertainment.
Another 48 per cent intended to postpone major purchases, including appliances and vehicles, while 40 per cent expected to cut retail spending.
At the same time, 41 per cent anticipated increasing expenditure on bills and loan repayments, suggesting that essential commitments are likely to absorb a greater share of household budgets and leave less room for consumption.
This caution comes against a backdrop of persistent concerns about the cost of living and the affordability of credit.
The latest survey suggests that households are increasingly balancing immediate needs against the risk of taking on repayments they may struggle to sustain if their earnings deteriorate further.
The tension between access and affordability is particularly significant in Kenya, where digital finance has expanded rapidly but financial resilience remains limited for many households.
The 2024 FinAccess Household Survey, conducted by the Central Bank of Kenya (CBK), the Kenya National Bureau of Statistics and Financial Sector Deepening Kenya, found that formal financial access had increased to 84.8 per cent from 83.7 per cent in 2021.
Yet only 18.3 per cent of Kenyans were classified as financially healthy, while 16.6 per cent of borrowers had defaulted entirely on their loans, up from 10.7 per cent in 2021.
The contrast suggests that access to banking, mobile money and digital credit does not necessarily translate into the capacity to save, absorb emergencies or invest for the future.
TransUnion’s findings also point to a more cautious approach to borrowing.
Although 73 per cent of respondents considered access to credit very important, the proportion intending to apply for new loans or refinance existing facilities over the next year fell to 57 per cent from 69 per cent.
Personal loans remained the preferred product, cited by 53 per cent of prospective borrowers.
Interest in mobile loans rose to 45 per cent, six percentage points higher than a year earlier, while 27 per cent intended to use buy now, pay later products.
The shift comes as digital lending expands, with CBK’s 2025 Bank Supervision Annual Report showing that outstanding loans from digital credit providers almost doubled to Sh110.1 billion in December 2025, from Sh55.2 billion a year earlier.
The number of licensed digital credit providers increased from 85 to 195, while the number of loans rose 71 per cent to 6.74 million.
Household financial pressures are compounded by digital fraud, which remains a significant threat as consumers increasingly rely on electronic payments and online financial services.
TransUnion found that 77 per cent of respondents had been targeted by attempted fraud through emails, online channels, phone calls or text messages during the preceding three months.
Although the share reporting that they had fallen victim declined to 9 per cent from 10 per cent a year earlier, Generation Z remained particularly exposed, with 12 per cent reporting that they had been defrauded.
Among consumers who received notifications that their identity details or online accounts had been compromised, 57 per cent changed the affected account’s password, while 54 per cent updated passwords on other accounts.
Half of respondents also said they had enabled passwordless login or multi-factor authentication.
