Poor Saving Culture Case Study

2043 Words9 Pages
1.1 Background to the Study The portion of disposable income not spent on consumption of consumer goods but accumulated or invested directly in capital equipment or in paying off a home mortgage, or indirectly through the purchase of securities forms the ideal part of individual or business savings (Dove, 2012). Poor saving culture, in this case, involves the lack of sustainable achievement of middle-income status caused by lack of proper money management, especially among the youth and small-and-medium enterprises (SMEs) because they are the backbone of the lowest income countries’ economy (Amritha, 2012). Rising cases of loan defaults, increased consumption and high debt recorded from low and middle-income earners indicate poor saving culture…show more content…
Despite the fact that more than 50% of people are income earners, most of them are still poor in saving (Opio, 2010). The factors that lead to poor saving culture in the SMEs include demographic, social and economic factors. In relation to demographic factors, the numbers of young entrepreneurs who are associated with poor saving habits are higher as compared to medium and old aged entrepreneurs. This is because the majority of young entrepreneurs have less income and less experience in the business. Economic factors are the major factor still influences poor saving culture (Nanna, 2008). Poor economic performance makes up to 41% of low income in Nairobi (Synovate report, 2011). Considering that a lot of people in Nairobi are low and middle-income earners, the increase in tax and raw material prices victimises businesses expansion and risk reduction in profit margin. The low profit and low income, in this case, cause poor saving habits among small and medium-sized businesses in Nairobi (Sabri,l, 2011). Averagely, 30% of Kenyans who live in Nairobi find it difficult to save with another 24-33% of Kenyans identifying the hardship of high rent and licenses which are not good for investment (Opio, 2010). In relation to social factors, bigger families are perceived to have fewer saving as compared to either single parented families and people who live entirely independent. It is also evident that employment status and occupation levels contribute to poor saving culture. In this case, lack of employment is rated as the largest social factor leading to poor saving culture. In relation to small and medium-sized businesses, lack of stable businesses was the main cause of poor saving culture. This observation reveals that businesses experiencing low income and slow growth due to stiff competition

More about Poor Saving Culture Case Study

Open Document