Financial Inclusion in Kenya
Financial inclusion can be defined as a situation where businesses and individuals have access to financial products and services that are affordable and meet their needs. This enables businesses to plan for long-term goals and unexpected emergencies, and families to facilitate their day-to-day needs. Financial services such as bank accounts for saving & transactional purposes, equity products, insurance, saving products, and loans are useful in funding businesses, managing risk, and investing. Financial inclusion in Kenya, to all sections of the society has been achieved through Digital Banking and FinTech.
Kenya has been able to make great strides in its financial inclusion, this having been spurred by speed in the uptake of mobile money. M-Pesa has led to many unbanked Kenyans entering the formal financial market and has driven the financial technology scene to great heights. A report by FinAccess 2021 shows that mobile money and mobile banking have led to an estimated 84% of Kenyans having access to basic financial services making Kenya a model for other developing nations.
Kenya’s growth in FinTech can be attributed to forward thinking financial inclusion strategies such as Vision 2030 in which Kenya strives to be a regional financial hub with a vibrant, efficient, and globally competitive financial system that will encourage savings and investments, and lead to sustainable economic growth. Other benefits that are associated with financial inclusion include:
- Better penetration of services as the rural population has easy access to bank accounts, cash payments, cash receipts, and account statements.
- Boosted economic growth as the saving culture will be inculcated in the rural population and the banking system strengthened as a result of reduced cash economy.
- Government subsidies will be directly deposited to the bank accounts of beneficiaries; thus funds will reach the intended recipients instead of middlemen preventing leakages and corruption.
- Encourages entrepreneurship due to adequate credit and transparent availability of credit.
Financial inclusion will motivate formal banking and transparent credit availability which will release people from the clutches of unofficial money lenders. Adequate credit will prompt entrepreneurial activity which will further enhance economic outputs and prosperity of the country.