Why Are Fewer Kenyan Bank Accounts Holding Over Sh500,000?

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The share of bank accounts in Kenya holding over Sh500,000 has fallen, according to new data from the Central Bank of Kenya (CBK). In 2024, just 0.65% of accounts, 739,803 in total, held more than Sh500,000, compared with 742,556 accounts, or 0.71%, in 2023.

Although the decline is small, economists say it points to wider challenges in the economy and a decline in high-value depositors.

Economic Pressures

Kenya’s economy has grown by an average of 4.7% a year over the past decade, driven by agriculture, services, and the rapid adoption of mobile money platforms such as M-Pesa. But the benefits have been uneven. A small proportion of Kenyans hold significant wealth, while the majority face tight household budgets.

The drop in the share of accounts holding over Sh500,000 comes after two years marked by high inflation, steep interest rates, and a weakening shilling. Analysts say these factors likely reduced the ability of even relatively affluent individuals to maintain large cash balances.

Some depositors may have used savings to cope with higher living costs, while others moved money into property, government bonds, or offshore accounts to protect their assets.

Inequality Indicators

The CBK data highlights Kenya’s growing income inequality. Out of more than 113 million registered bank accounts, many linked to mobile money, fewer than 1% hold more than Sh500,000.

Kenya’s Gini coefficient according to the World Bank was 38.7 in 2021, among the highest in East Africa, and has likely worsened since. The same year, the Kenya poverty rate was 46.4% at the $3.00-a-day level.

While the number of high-net-worth individuals in Kenya has been rising, this has not translated into broad-based economic benefits. Much of this wealth is invested in high-end real estate and luxury developments, which contribute little to addressing housing shortages or creating jobs for lower-income groups.

Economic Impact

The concentration of wealth in a small share of accounts affects how money moves through the economy. High-value depositors are more likely to hold assets in real estate or foreign investments than spend in ways that directly stimulate local demand. This limits opportunities for small businesses and job creation.

The percentage of bank accounts holding over Sh500,000 in Kenya also serves as a measure of confidence in the banking sector. A reduction may indicate that wealthy individuals are seeking alternative investments or shifting funds abroad, potentially affecting liquidity for banks that rely on deposits to fund lending.

Despite Kenya’s progress in expanding access to financial services, particularly through mobile banking, many citizens still cannot save enough to accumulate large balances. Those working in the informal sector face low and unstable incomes, high transaction costs, and limited access to credit.

Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.