In 2024, Stears expects the burden of taxes and statutory deductions will continue to weigh heavily on Kenyan salaried workers, amplifying their financial strain. Deductions for middle-income earners earning Kes 50,000 rose sharply from 16.9% to over 20.5% in 2023, and low-income earners also saw a significant increase, squeezing disposable incomes.
As a result, the average Kenyan household now allocates 59% of income to living expenses, notably higher than the African average(51%).
Compounding this, inflation in essentials like food and alcoholic beverages, accounting for 32.9% of the average consumer spend, has risen by 7.9%. Coupled with an average decline of 2.7% in real earnings growth, these trends point to a tightening of consumer budgets. Even though tax cuts are expected in 2024, higher statutory deductions will keep consumer spending patterns and market dynamics in their current trajectory.
This situation presents challenges and opportunities for fund managers interested in the Kenyan
