When it comes to achieving financial freedom in Africa, new research by KASI has found that despite challenges, Africans are aiming to achieve financial freedom. The state of financial freedom report by KASI found that investing, starting a business and savings are 3 things that will get them closer towards financial freedom.

The survey explored urban dwellers willingness to achieve financial freedom and whether they are taking the steps to turn it a reality. The findings indicate that as a group, the respondents aim to achieve financial freedom with 9 out of 10 saying they are looking to achieve it while 8 out of 10 are very clear as to why they want to achieve it. When it comes to what financial freedom means to the respondents; being on track to meet financial goals (buy a house, start a business), feeling in control of day to day expenses bills and lastly having the capacity to absorb financial shocks (job loss, accident) are the main characteristics of being financially free.

Unfortunately, the road to financial freedom is filled with obstacles and unexpected events that can easily derail one’s plans and financial stability.

“When it comes to achieving financial freedom, it is important to grow your nest eggs but also protect yourself from unexpected events/shocks,” said Yannick Lefang, CEO of KASI Insight. “Customers need financial services beyond basic banking if they are to get closer to achieving financial freedom.”

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Interestingly, the survey found that despite respondents’ willingness to achieve financial freedom, very few people actually take steps to turn it into a reality. The survey reveals that 3 out of 10 respondents have bought insurance to manage the risk of unexpected events that include auto insurance, health insurance or life and have confirmed that they are in control of their finances because they have a system for keeping track. When it comes to investments and growth, a quarter of respondents are comfortable with their investments leaving three-quarter unsatisfied.

“This gap can be explained by that fact the breadth of financial services in Africa is still low. The mobile phone and alternative channels have boosted financial inclusion in countries like Kenya but the services offered are mostly basic banking by types and size of the transactions,” said Mr Lefang who leads KASI Insight, a knowledge partner of the Pan-African Bancassurance and alternative distribution channel conference.

Other findings of the research are:

  • 4 out of 10 respondents say they know exactly where they are financially (net worth, assets, etc.)
  • 3 out of 10 respondents are comfortable with their financial situation and their investments
  • 2 out of 10 respondents say they have built a sustainable and integrated retirement income that will last longer than their life expectancy
  • A quarter of the respondents say they have a strong succession planning in place that ensures financial and estate assets will be passed on to love ones with minimal cost, complete privacy and in a timely manner.

The survey also reveals that there are differences between countries. As a group, achieving financial freedom is a priority for the majority but when it comes to taking steps to make it happen, respondents in Ghana are failing or unable to take important steps while respondents in Kenya and Nigeria fare better.

Finally, while banks are focusing on digitalization in Africa, it is important to keep in mind the needs and challenges of the customers if they want to be seen as trusted partners. Unfortunately, it is not the case based on the survey results, in fact, 6 out of 10 respondents said their bank is not helping them address financial challenges and concerns such as paying off debt, budgeting, and investments. To make the matter worst, only 1 in 10 respondents are very likely to recommend their bank to friends/family resulting in an overall NPS of -36.

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