This archive report was first published on 30 July 2019.
Kenya's reputation as a leader in financial inclusion in Africa is well-deserved, with innovations like M-Pesa and mobile banking platforms making it easier for citizens to access financial services. However, a closer look at the data reveals a concerning trend: despite increased access to formal financial services, Kenyans' financial health has actually declined.
According to a 2019 FinAccess report, 83% of Kenyans have access to formal financial services, making it the most financially inclusive country in East Africa. However, the same report found that only 22% of Kenyans are financially healthy, down from 39% in 2016. This means that many citizens are struggling to manage their day-to-day finances, cope with risk, and invest in the future.
The survey, which involved questionnaires distributed among 8,669 households between September 2018 and December 2018, also found that Kenyans are increasingly relying on informal financial services, such as groups and moneylenders, to cope with financial shocks. In fact, 62% of the population uses a combination of formal and informal financial solutions, while 11% is excluded from accessing both formal and informal services.
Even with the variety of financial tools available, Kenyans are still struggling to manage financial shocks, such as poor health. The report found that only 3% of people with access to national insurance use it as their main solution to cope with health shocks, while the rest rely on friends and family for financial support.
As the country continues to digitize its financial sector, it's clear that more needs to be done to promote financial health and well-being. This includes promoting appropriate regulation to ensure transparency and fair treatment, as well as focusing on providing solutions to real-world problems rather than just providing accounts.
