Digital channels and mobile money driving Kenya’s financial inclusion




The digital revolution is closing the gap between the haves and have nots when it comes to access to financial services with formal access for the poor rising steeply from just 10% in 2006 to 70% in 2019, closing the inclusion gap between the wealthy and the poor according to a new report. The report, FinAccess 2019, notes that women now have similar levels of formal inclusion to men with only a 6% difference between them.

FinAccess 2019 shows that major cities are now reaching full inclusion, with 96% and 94% of those living in Nairobi and Mombasa now formally included. Since 2016, there has been a substantial increase in inclusion of between 7% – 13% in the west of the country (Nyanza, Western, and lower Rift Valley). This contrasts with southern and eastern counties which have seen a minimal increase, and, in the case of central, even a slight decline. The big surprise is north eastern where inclusion has jumped from 25% to 84% mainly through uptake of mobile money. The magnitude of this shift calls for further research.

(TOP: Image of the three mobile platforms in Kenya – MPESA; Airtel Money and T-Kash. Photo: Moshek Africa). 

Digital finance is driving market growth. There has been an 8% increase in the share of the population using mobile money, mobile banking and digital apps since 2016 in contrast to a 2% decline in users of traditional services (traditional bank accounts, SACCOs and MFIs).

Mobile money has powered Kenya’s financial inclusion, with almost all the formally included having a mobile money account. While 79% of the population are registered mobile money account holders, 88% of the population have access to mobile money through their own or other people’s accounts. Mobile banking services that offer interest-bearing savings and formal credit are now used by 1 in 4 Kenyans. Since 2012 when MShwari demonstrated the viability of these types of services, partnerships between MNOs and banks have multiplied with every bank now shifting to a digital strategy

For a third of the formally included population, mobile wallets represent their sole formal account. Mobile money services such as M-PESA offer a bare-bones account with a basic store of value and relatively expensive payments and remittance functionalities. Until recently they have not given people access to regulated savings, credit or insurance. The fact that a third of the formally included still lack access to core financial products, begs the question of whether we are over-representing the level of inclusion in Kenya.

FinAccess 2019 is the fifth in a series of national household surveys on access and usage of financial services in Kenya. The FinAccess survey is supported by FSD Kenya, the Central Bank of Kenya (CBK) and the Kenya National Bureau of Statistics (KNBS) and with contributions from non-profit organisations and the private sector.

The survey sought to contribute to market development by providing better information to those who will shape the future of the sector – policymakers and regulators, industry players, analysts and researchers and consumer groups. The goal of FinAccess is not simply to measure finance inclusion in Kenya but to provide insights into how finance needs to change.

Reflecting our growing appreciation of the complexities of finance and inclusion this year’s survey incorporates new metrics. We look at the role of finance in helping people to meet their livelihood needs. Drawing on the emerging concept of ‘financial health’, a new index has been created to provide a high-level proxy for the impact of finance on people’s wellbeing.

FinAccess targeted individuals aged 16 years and above, with households drawn from the fifth National Sample Survey and Evaluation Programme (NASSEP V) household sampling frame. A total of 8, 669 households responded to the questionnaire, with a response rate of 89%.

Field work commenced on October 1, 2018 and was concluded on December 15, 2018. The sample was weighted to cater for non-proportional distribution of households and non-response to provide estimates that are representative of target population at national and sub-regional levels.

The report focuses on adults, defined as those aged 18 years and above, the minimum age to access most formal financial services. Adults comprise 92.4% of the total population surveyed, representing approximately 25 million Kenyans. The 16 – 17-year-old age segment of the population is estimated at 2 million. The report charts the financial inclusion journey, moving from access through usage and quality to impact.

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