2019 Financial Access Survey, Kenya: Key Trends

In April 2019, the working group comprised of the Central Bank of Kenya, the Kenya National Bureau of Statistics (KNBS) and the Financial Sector Deepening Kenya (FSDK) had officially presented the findings of the 2019 Financial Access (FinAccess) Survey, an important study that has been conducted in Kenya since 2006 to track different aspects of the country’s financial inclusion – i.e., the accessibility of quality financial products and services to individuals and businesses regardless of their net worth. Financial Inclusion has been an important element in the SGDs pursuits as, among others, it is closely linked to equality (including gender equality), poverty reduction, mother-child welfare, identity (including digital), and literacy.

The launch presentation of FinAccess findings is available on the KNBS website here. For those who do not have time to go through a long report, we highlight the most important findings (from our perspective):

• Between 2006 and 2019, access to formal financial services among Kenyan adults (16+) has increased dramatically – from 26.7% to 82.9%, respectively.

• Access, however, does not necessarily translate into use – most Kenyans continue using cash for all types of routine transactions from paying government fees to purchasing assets to sending/receiving remittances to covering daily needs.

• Mobile money is the main rival of cash but only for sending/receiving domestic remittances. Nevertheless, the appeal of mobile money as a transactional tool remains very strong, and in fact the uptake of mobile money is the main driver of financial inclusion in Kenya – 79% of adults are mobile money users (compare this to 83% of users of any formal services overall).

• It is important to note the complementarity of formal financial products/services – e.g., 79% of adults use mobile money and 41% use banks – a significant overlap, which means that up to a half of mobile money users also have a bank account. While banks do not contribute a lot to broadening financial inclusion, they definitely play an important role in deepening financial service use – banks are more likely compared with mobile money to be used to pay for formal services (e.g., pension, school fees, government fees) and to buy assets (although not as likely as cash). It also appears that banks are more likely to host long-term savings, while mobile money are promoting insurance uptake and the fast-growing sector of digital loans.

• While the sector of financial inclusion is celebrating significant gains, the financial health of the population has worsened compared with 2016; fewer adults feel they are able to manage daily expenses and financial shocks, the proportion of those able to invest in the future has halved compared to 2016. These findings are aligned with the two most pressing financial struggles reported by Kenyan adults — paying for education (i.e., investment in the future) and buying daily food (i.e., managing daily expenses).

• Several trends in Kenyans’ financial behaviors signal not just present-day struggles but also somewhat cautious outlook for the future, including preference cash transactions (which have no record) and active accumulation of savings (70% of adults save) in combination with strong reliance on debt (50% of adults report loans). The combination of these three behaviors can act as a household preparation for [further] financial instability/uncertainty.

Overall, the 2019 FinAccess Kenya survey suggests that access to formal financial services alone cannot mitigate the challenges presented by the weak state economy; in the context of financial uncertainty, financial inclusion is not enough to compel formal financial service users to reduce their reliance on cash either. While many Kenyan adults recognize (and at least a third enjoy) the benefits afforded by access to two or three formal financial products/services, until the financial environment in the country is perceived as stable/predictable and secure, the default “financial defense” will be to keep own money immediately accessible and controlled, i.e., in cash and in hand – which, ironically, makes this own money more vulnerable to being lost due to fraud, robbery or misplacement.