Kenya – Financial Access Study

Performed by the Steadman Group

Methodology

• Sampling based on the CBS NASSEP IV sampling frame

• Drawn from all 69 districts

• Random selection of cluster, household and individual

• Sample size achieved of 4,218

•Distribution of the samples (individuals aged 16 and over)

Nairobi 438

Central 570

Coast 360

Eastern 690

North Eastern 140

Nyanza 710

Rif t Valley 1,050

Western 460

Results overview

• Outreach of financial service providers

• Financial access strand

• Usage of savings, credit, money transfer and insurance

• Informal groups

• Technology

• Youth

Outreach of financial service providers

Financial Access Strand

Bank Account Usage by Province

Financial access bymain source of income

• Most of the banked work:– for a wage in a large

establishment– in their own business

• Most of the unbanked get income by– producing food crops– transfers from family /

friends

Characteristics of the banked / unbanked

• Majority of the banked: – are male– have secondary

education or higher– own a mobile phone

• Most of the unbanked:– are female .– more likely to have little

education– have no access to a

mobile phone

Usage of savings products

Usage of credit products

Usage of money transfer services

•Transfers within Kenya•Mostly informal using family / friend or matatu

•Transfers outside Kenya•Mostly formal using transfer agencies or a bank account

Usage of insurance products

*multiple responses were spontaneously mentioned by interviewees

Informal groups

Typical group activities –•Give one member all monies collected in one round•Raise money for emergencies•Raise money for funerals•Lend money to members when they need it

Mobile phone usage

Youth – 16/17 year oldsSource of income

•5% with formal services•2% with indirect access through guardian•One in three earn a living in agriculture

Analysis of the Data

Supply:banking services follows formaleconomy…

Supplybank penetration is driven by thesize of the market

Informal finance:Formal and informal finance are not substitutes

Informal finance

Banked and unserved use of informal credit and savings equally

Financial “Exclusion”Factors:

• Cost / Affordability– Low incomes / cash balances (not worth banking– Access barriers (opening / minimum balances)– Transactions costs (transport, time)

• Availability of Informal (cheaper) alternatives– Shopkeepers / suppliers: credit– Friends, family, savings, credit, insurance, remittances. – Matatu / buses: remittances

• Unavailability (Northeastern)

Increasing outreach &demand:

• Cost cutting innovations to make affordable banking services commercially viable– Cellular phone banking– Alternatives, low cost outlets, agencies.– Product innovation e.g. over the counter savings products.

• Promoting SACCOs outside formal employment / cash crop agriculture

• Promoting payments / savings oriented MFI’s.