Kenya tops list in terms of financial inclusion

Kenya tops the list in financial inclusion, with a new report giving the country a rating of up to 89%. According to the 2017 Brookings Financial and Digital Inclusions Project Report, the country emerged top among 26 countries that provide easy access to financial services to underserved people, beating Brazil, South Africa and Nigeria, which scored 79%, 78% and 74% respectively. To answer these questions, the Brookings Institution, a non-profit public policy organisation based in Washington DC, analysed financial inclusion in 21 geographically, economically, and politically diverse countries: Afghanistan, Bangladesh, Brazil, Chile, Colombia, Ethiopia, India, Indonesia, Kenya, Malawi, Mexico, Nigeria, Pakistan, Peru, Philippines, Rwanda, South Africa, Tanzania, Turkey, Uganda, and Zambia. Each of these nations has committed to improving financial access and usage, and collectively they represent a diverse range of geographies, cultures, and political and economic systems. Brookings notes that the top-scoring countries include Kenya (achieving 89% of the total possible points), South Africa (80%), Brazil (78%), Rwanda and Uganda (tied with 75% each), and Chile, Colombia, and Turkey (tied with 74% each). “These countries demonstrated considerable commitment to financial inclusion by defining specific inclusion objectives and taking policy, regulatory, and technological steps to speed progress toward inclusion,” the report states. “These steps included passing laws that facilitated financial inclusion, implementing legal and regulatory changes that permitted involvement of diverse institutions in the financial services market, supporting mobile and digital networks that enabled service delivery, developing shared payments infrastructure, providing incentives for digital money usage, and adopting other changes that helped implement inclusion goals.” The analysis was based on four dimensions of financial inclusion, which saw Kenya achieve an 89% score on country commitment, 89% on mobile capacity, 94% on regulatory environment and 78% on adoption of mobile money services. The study came on the heels of the Oxford Business Group’s banking inclusion report, which shows that 75% of Kenya’s population live within a three kilometre radius of a financial institution. The report shows that although commercial banks operating in Kenya have declined from 43 in 2015 to 41 this year, the country is way ahead of other leading economies on the continent like South Africa and Nigeria, which have higher populations. Only 22 commercial banks are operating in Nigeria, against a population of 180 million, while South Africa has 19 commercial banks serving 55 million people. Kenya’s population currently stand at 44.2 million. “The figure is impressive given that much of Kenya’s population is dispersed, with a lower urbanisation rate of 25% to 30%, compared to Ghana and Nigeria which have close to 50% but a lower financial inclusion rate,” the report notes. The country’s financial inclusion has been on an upwards trend, rising from 59% in 2013 to 73% in 2015, when the country had 1,523 bank branches. The inclusion rate rose to 75% this year on the back of increased agency banking services. According to the report, the country had 40,224 agents linked to 17 commercial banks by March last year, conducting 79 million transactions valued at KSh442.2bn. Additionally, Kenya has 13 microfinance banks and 77 foreign exchange bureaus. The market has more than 4,000 saving and credit cooperative societies (Saccos), with 180 duly licensed by the Sacco Societies Regulatory Authority. “The banking sector in Kenya has over time effectively ridden on the M-Pesa revolution, which was pioneered in the country to bring services closer to people. The rate can only go higher considering the growing mobile phone penetration,’’ states the report.

Kenya tops list in terms of financial inclusion

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