Smartphone penetration has propelled the digital economy across Kenya through hosting e-commerce, digital borrowing and lending, social networks, and mobility applications. This was revealed in the FinAccess Household Survey 2019 released by the Central Bank of Kenya in conjunction with the Kenya National Bureau of Statistics and FSD Kenya.
The survey looked into consumer access and usage of formal and informal financial services. Formal services are offered by commercial banks, SACCOs, microfinance banks, insurance service providers, NSSF, NHIF, digital apps and mobile money. Informal financial services are offered by shopkeepers/supply chain credit, chamas, employers, and shylocks. However, there are individuals who do not use any form of financial service and instead rely on friends, family or keep money in secret places.
Cash is still king when undertaking transactions such as daily expenses, monthly bill payments, fee payments, and purchase of assets.
In this case the overall access to formal financial services and products improved to 82.9 percent in 2019 from 75.3 percent in 2016 (last survey). The findings in 2019 indicate that Kenya has made strides in expanding financial access from 26.7 percent in 2006, the first baseline survey.
However, there was persistence of financial inclusion gaps as measured by sex, age, education, residence, income, and wealth quintiles. In this case, access to finance is highest among 26-35-year-old segment of the population with access increasing with education, and wealth quintiles.
The report attributes the introduction of mobile financial services in 2007 followed by increased partnerships and innovation such as mobile banking, agency banking, digital finance and mobile apps as driving usage of financial services and products.
Mobile money services usage jumped 79.4 percent from 2016 with digital loan apps usage rising by 8.3 percent in the same period. Mobile money is a key driver of narrowing the gap between rural and urban users of financial services. Kenyans use mobile money mainly for deposits, withdrawals, purchase of airtime, and safekeeping.
Digital activity
The report notes significant growth in digital accounts ownership and registration in 2019 compared to 2016. Digital account holders access financial services via mobile phone app, website, debit/credit card, or other means without using cash.
Digital accounts enable the users to save, borrow, and perform transactions. Government policy on universal healthcare drove uptake in NHIF. Despite innovations such as m-akiba, the survey found a steep decline in investment in securities, shares, and mutual funds.
The survey revealed that digital loan apps are the third most common source of credit trailing shopkeepers’ and family/neighbor loans.
Kenya’s high mobile phone penetration will increase financial inclusion and hasten digital economy adoption.
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