In Kenya, the culture of informal savings and investment groups—like chamas, merry-go-rounds, and table-banking—has been a cornerstone of financial management for decades. These groups foster a savings habit and provide quick access to funds for emergencies or small-scale investments. However, while these informal methods are important, they are often limited in their capacity to help families build long-term, sustainable generational wealth.
The reality?
Relying solely on informal financial systems can leave families vulnerable to economic shifts and unforeseen circumstances, threatening the financial security of future generations.
The Risks of Relying on Informal Financial Services
80% of Kenyans rely on informal financial services to save and invest? While these systems offer flexibility and a sense of community support, they often lack the formal structures needed for wealth preservation and growth. In a country where inflation averaged 7.5% in 2023, savings held in informal groups may struggle to keep pace with rising costs, leaving families with reduced purchasing power and eroded savings over time.
These savings groups are great for short-term goals like household expenses, school fees, or starting small businesses, but when it comes to long-term wealth creation, they fall short. Here’s why:
Lack of Diversification: Chamas and merry-go-rounds usually involve a limited range of savings and investment opportunities, often focusing on rotating funds or low-yield ventures.
No Formal Protection: Without access to formal financial institutions, families miss out on essential services like insurance, regulated investment options, and pension plans.
Vulnerability to Economic Shocks: Informal systems are often less resilient during times of economic hardship, leaving families without a financial safety net.
These limitations make it difficult for families to protect their wealth or grow it in a meaningful way.
What is family wealth management?
My definition of family wealth management is a comprehensive approach to managing and preserving wealth. It’s about more than just saving money—it’s about creating a financial strategy that ensures stability, growth, and sustainability for future generations. In a country where only 22% of Kenyans have access to formal financial services, according to a 2023 report by Financial Sector Deepening (FSD) Kenya, the potential for families to benefit from structured wealth management is enormous.
A Sustainable Financial Future for Kenyan Families
Kenya’s informal financial systems have their place, but to create lasting, generational wealth, families need more than just short-term savings and investments. Family wealth management offers a pathway to financial stability, growth, and legacy building.
The future of wealth in Kenya lies in embracing the power of family wealth management. Let’s work together to build systems that allow us to protect, grow, and pass on our financial resources—so that future generations can thrive.
