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Financial health declines in Kenya, while financial services access and use rises


Mobile money use increased with 79 per cent using it. But both financial health and use of other financial products such as insurance declined. Picture credit: Fiona Graham / WorldRemit

The ability of Kenyans to use financial products to enable them to cope with shocks such as ill-health has declined, according to a new household survey on financial health.

The finding came in FSD Kenya’s fifth household survey tracking financial inclusion. This highlighted in headline figures that overall access to financial services has improved over the last three years, from 75% to 83% of the population, with access gaps faced by women and the rural population closing.

Usage of a range of services was also up, with use of mobile money services, for example, increasing from 71% to 79%, and the proportion of people using credit rising from 34% to 50%. Use of insurance, investment and pension products was however down compared to the previous edition of the survey series, published in 2016.

However, a report on the survey data said that while there is increasing use of mobile money, a growing proportion of Kenyans are not able to use financial services to cope with shocks.

The report urges policy makers to “pay attention to barriers that limit access to a wide range of financial service providers and products”. It pointed to results that financial health as measured by ability to set aside money and cope with shocks such as ill-health had deteriorated compared to the last survey.

While access to credit is increasing, half of Kenyans still do not use loans; strong growth in use of digital app loans comes from a low base, to 8%; and use of savings products only rose from 66% to 70% over three years. Meanwhile, a third of Kenyas have faced a shock in the last 12 months and half still rely on asking friends or family to cope with shocks.

Development Pathways works with partners to secure financially-inclusive payments mechanisms. Our Senior Payments and Financial Inclusion Specialist Sarah Langhan has said that social transfers will only be “truly transformative when they include measures to further financial inclusion”.

“For too long, social cash transfers and financial inclusion have been seen as separate yet complementary policy initiatives. It is high time that digital financial services plus and cash plus should be seen as the standard approach to cash transfer programme design,” she added.

The 2019 FinAccess Household Survey is available here.


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