Are low-income workers financially irresponsible? An analysis of financial and accounting practices in Nairobi

Studies on financial inclusion place strong emphasis on financial literacy and individual financial responsibility. Over-spending and over-indebtedness are often thought to be consequences of a lack of understanding of prudent budgeting, saving, and investment. Building on the critical accounting and everyday financialisation literature, this study challenges those claims. By interviewing 30 low-income workers in Nairobi, Kenya, we find that many are highly financially literate and have extensive knowledge on how to save on transaction costs and to select optimal borrowing opportunities. In fact, participants report several new techniques to save on costs, such as splitting transactions on M-Pesa to avoid fees. Yet, as their income is low, those individuals often find themselves indebted over sustained periods, particularly for basic needs such as food and transport. Furthermore, where individuals select costly financial services or are unable to save for the future, these seem to be consequences of structural and income constraints rather than a lack of understanding of accounting practices. Taken together, our article critiques established understandings of financial knowledge by presenting new evidence on everyday financial practices in Nairobi. Our results suggest that financialisation of everyday life has spread to countries beyond the Global North and might have severe consequences for development goals.