Treasury CS John Mbadi during the 2025 Budget reading on June 12th,2025 at Parliament. [Elvis Ogina,Standard]
Kenyans grapple with stagnation, decline in earnings
Business
By
Macharia Kamau
| Oct 31, 2025
Most Kenyans reported a stagnation or decline in their earnings over the quarter to September compared to a similar period last year, pointing to the difficulties that they continue to grapple with.
Worst hit were people employed in the informal sector, where the survey noted incomes were generally on a decline as the sector reduced hiring.
This is even as their counterparts in the formal economy, whose incomes have been slashed by recent high taxes, got creative and shored up their earnings through side hustles which, according to a new survey, cushioned some of them from the general decline and stagnation in income.
The ICEA Lion Asset Management's Consumer Spending Index noted that half of respondents indicated that their income remained flat between July and September 2025 compared to the same quarter in 2024.
This was the highest level of stagnant income growth recorded this year.
READ MORE
Regional units push Equity profit to Sh52.1b as Kenyan economy slows
Agriculture sector borrowing balloons to Sh167.7 billion
Naivas opens its 111th store at Magadi
Nissan says expects $1.8 bn operational loss in 2025-26
Cooking diplomacy on the menu as Kenya hosts first Africa-Chinese cuisine contest
Coffee nets Sh411 million at the auction signalling strong market demand
KEBS pushes new Standards Bill to crack down on unsafe goods
Kenya moves to cut building sector emissions as urbanisation surges
Nairobi's new sewer plan ends 'flying toilets' in Mukuru slums
How KPA is racing to expand Mombasa Port ahead of peak season
“Most of the income decreases were noted among people working in the informal sector,” said ICEA Lion Asset Management chief executive Einstein Kihanda.
“Increased incomes were noted among self employed or employees of organisations. The main reasons attributed to increased incomes were side hustles, which is taking up income sources outside the normal jobs that people hold.”
The survey also noted that upper middle class and high income segments had the largest proportion of respondents recording better incomes over the past year.
The low income segment, however, had most individuals indicating that their income was lower in the third quarter of 2025 compared to a similar period in 2024
There were also signs of improvement in the economy as survey respondents said they were able to buy more household items over the quarter to September using the same amount of money compared to a similar period last year.
This is on account of easing inflation as well as relative increase in liquidity as banks resumed lending to businesses and households.
“Approximately 87 per cent of consumers indicated that they had spent higher than they spent in the previous quarter.
"We note that the bulk of increased spending was attributed to purchase of additional items rather than higher prices of goods, which is a good sign,” said Kihanda.
Eldoret and Nakuru had the highest proportion of respondents who said their income had gone up.
The opposite was true in Kisumu, which the survey notes had the highest proportion of respondents saying their incomes had declined over the last 12 months
There are expectations that conditions will further improve in the coming months.
“We are entering a phase where inflation is stable, our interest rate environment is normalising, as you can see from CBK cuts that have come down in the last 18 months,” said ICEA Lion Group chief investment officer Gerald Gondo.
“A key tailwind that is going to come through is private sector credit extension, when rates have come down. Hopefully NPLs within the banking sector will normalise, that liquidity that we are seeing within the market should flow to the real economy through lending.
"And the key beneficiaries that you would want to see from increased lending are the key sectors within the economy – agriculture that is important from an employment perspective, financial services that intermediate this liquidity in the economy and real estate.”
Share this story